The New 1099-NEC Form
Are you aware that there is a new 1099 form that must be filed in January 2021? That form is called the 1099-NEC and is used for those who are paid non-employee compensation as independent contractors, or businesses that are paid $600 or more that are not a part of your company but are due a form claiming what they were paid.
The 1099-MISC will have all other compensation that you have reported in the past, except what used to be in box seven non-employee compensation listed. Most companies will still need to use the 1099-MISC to state rents paid.
It is important to know the due dates for these forms as well. The 1099-NEC is due to both recipients and the Internal Revenue Service by January 31st of each year. The due date for recipients is still January 31 each year, but the 1099 MISC is due to the IRS February 28th if filing on paper or March 31st if you file electronically. If the deadline falls on a weekend, the due date is the next business day.
You will have needed to request a W9 form from your vendor letting you know their tax ID, address, legal business name, and entity type, so you know if they need to receive the 1099-NEC or not.
If you paid your vendor through a credit card or third-party payment platform such as PayPal or Square, you do not report these payments on a 1099 form. These amounts will be reported by the merchants on form 1099-K.
Another important thing to note is that the IRS will not submit amounts reported on 1099-NEC to states which means you must now file 2 returns instead of one.
If you have any questions about this change or need help processing your forms, feel free to give us a call at (310) 534-5577, or e-mail contact@abandp.com.
Candy Messer, owner of Affordable Bookkeeping and Payroll, is a profitability/growth advisor working with entrepreneurs in service-based industries to help them have successful businesses. With more than 22 years of experience in the industry, Candy understands the stresses business owners face and offers customized services to meet their varying needs. Candy can be reached at www.abandp.com.
