The IRS has revived Form 1099-NEC, which will be required for reporting 2020 non-employee compensation beginning in 2021. The 1099-NEC will be Box 1, and other types of payments should go in Boxes 2 through 5, depending upon their nature. Starting with the new year, you’ll need to register non-employee compensation on a separate form from team member benefits.
The new legislation has introduced changes that will affect your taxes this year. One of these changes is the due dates for reporting specific data, which now need to be filed by January 31st, 2021, or February 28th, 2021, depending on what type you are filing as (1099-MISC vs. NEC).
The 1099-NEC is a form that can be used for any non-employee compensation over $600. It should include payments from individuals or partnerships to independent contractors and materials used in performing services and other related items.
The 1099-MISC is a necessary tax form that you will need to file if your income includes royalty payments, rents, or prizes. It can also be used for other types of revenue, like medical care professionals receiving payment from their patients (i.e., doctor’s bills).
While the 1099-NEC and MISC are both important, it is helpful to understand their differences. You can use IRS information or consult with an expert if needed!