1099NEC FORMS

New 1099 tax forms replace 1099-MISC for non-employee compensation.

If you used 1099MISC Box 7 to report income for contractors or any type of non-employee compensation in the past, you MUST USE THE NEW 1099-NEC for the 2020 tax year.

 

  • Efiling is required for 100+ recipients
  • Small minimum quantities
  • Compatible with QuickBooks® and other software

1099NEC Copy A

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New 1099NEC Forms & Efiling made easy with the right options from Discount Tax Forms. Shop easy, ship fast!

WHAT IS 1099NEC?

The 1099NEC Form is new for 2020.

It is used to report $600+ in non-employee compensation that was previously reported in Box 7 of 1099-MISC form. 

WHEN IS IT DUE?

Forms must be mailed to recipients by January 31.

They must also be mailed or e-filed with the IRS by February 1, 2021 (Jan 31 is a Sunday).

WHO SHOULD USE IT?

Businesses required to report payments of $600 to contractors, freelancers, attorneys and more.

If you have used a 1099-MISC form in the past to do this, use the 1099-NEC for 2020.

ONE MORE THING…

E-filing thresholds have also changed for 2020.

If you file 100+ forms, you must efile. (It used to be 250+)

That will also change again in 2021, with e-file required for 10+ forms per payer.

1099-NEC or 1099-MISC?

The IRS will require that businesses use Form 1099-NEC to report non-employee compensation in 2020.

Using the 1099MISC form to report payments to contractors may result in a penalty.

The new 1099NEC form replaces the 1099-MISC for reporting nonemployee compensation (Box 7), shifting the role of the 1099-MISC for reporting all other types of compensation.

The overall process for reporting nonemployee compensation is changing drastically for the 2020 tax year. We’ve compiled the essential details regarding the changes, so you know what to expect and how to handle each of the forms to avoid penalties.

A Quick Video About New 1099NEC Form Requirements

Instructions for Form 1099-NEC

To use the 1099-NEC properly, you need to understand what is considered non-employee compensation.

Previously reported on Box 7 of the 1099-MISC, the new 1099-NEC will report any payments of $600 or more to nonemployee service providers, such as independent contractors, freelancers, vendors, consultants and other self-employed individuals (commonly referred to as 1099 workers).

According to the IRS, a combination of these four conditions makes a payment reportable on the 1099NEC:

  • It is made to someone who is not your employee.
  • It is made for services in the course of your trade or business.
  • It was made to an individual, partnership, estate, or, in some cases, a corporation.
  • Payments were $600 or more for the calendar year.

Examples of when to use 1099NEC forms:

  • Professional service fees to attorneys, accountants or architects
  • Fees paid by one professional to another
  • Payments for services, including those for parts or materials used to perform the services, even if they were incidental
  • Commissions paid to nonemployee salespeople, not repaid during the year

Exceptions:

  • Payments for merchandise, phone, freight, storage or similar items.
  • Payments to a tax-exempt organization, including tax-exempt trusts or governments.

Dos and Don’ts for 1099-NEC

✓ Do verify that the recipient’s taxpayer ID is correct. You must have Form W-9 from each recipient with the current taxpayer ID before you complete Form 1099-NEC.

✘ Don’t use Form 1099-NEC to report personal payments.
✘ Don’t use Form 1099-NEC to report employee wages; use Form W-2 instead.
✘ Don’t report gross proceeds to an attorney (not fees) on Form 1099-NEC; use Form 1099-MISC instead.
✘ Don’t use Form 1099-NEC to report payments of rent to real estate agents or property managers; use Form 1099-MISC instead.

Please note: You must also file Form 1099-NEC (report in box 4) for anyone from whom you withheld federal income tax under the backup withholding rules, regardless of the amount.

Filing Form 1099NEC

  • Distribute to recipients by January 31.
    (For 2020,  Jan. 31 falls on a Sunday, so Monday Feb 1 is the official deadline).
  • File with the IRS by Jan. 31 through paper or electronic filing.
    (For 2020,  Jan. 31 falls on a Sunday, so Monday Feb 1 is the official deadline).
  • As part of the Taxpayer First Act, many businesses will no longer be able to submit paper forms. For tax year 2020, the electronic filing threshold is 100 forms. Which means any business with 100 forms or more are required to e-file. For an easy efiling solution, check out DiscountEfile.com!

Online Filing Eliminates the Forms!

1099-NEC Forms

1099 Filing Guides

FAQ for 1099-MISC Filing
How to E-file 1099MISC forms

You can e-file 1099NEC forms with the IRS easily! 

If you file 100 or more forms in 2020, you are now required to e-file. (This is a change from the 250+ threshold previously).

But that will change again in 2021, when the IRS will required payers with as few as 10 forms to e-file. 

Most software that prints 1099NEC forms and some will also efile for an additional charge.

There are also online systems available, such as DiscountEfile.com, for easy e-filing too. You can enter data manually, or import from your accounting software.

E-file 1099-NEC forms for as low as about $1 each.

What forms do I need?

You need enough 1099-NEC forms to meet the filing requirements of federal, state and local tax agencies.

Payers must send forms to the IRS, as well as the recipient.

Decoding 1099-NECform copies

  • Copy A is sent to the Federal government by the payer.
  • Copy B is sent to the Recipient for filing with their federal tax return.
  • Copy 2 is sent to the Recipient for filing with state or local tax returns, or for their files.
  • Copy C is kept by the Payer for their files. (Copy 2 and Copy C are typically printed on the same page)

A 3pt form is required for federal filing only.
A 4pt form is required for federal and state filing.
A 5pt form is required for federal, state and local filing.

Don’t forget a 1096 Transmittal form to summarize the data for each payer for the tax year.

What is a 1096 and do I need one if I efile?

1096 Summary & Transmittal forms are required when mailing 1099 Copy A forms to the IRS.

They are automatically generated when e-filing with a system like DiscountEfile.com. A separate paper form is not required.

Print one 1096 form for each payer for a single type of 1099 form. 

If you have multiple types of 1099 forms (NEC, MISC, DIV, R, etc.) you must print a separate 1096 form for each.

Order 1096 Forms

Best way to file only a few 1099-MISC?

If you only have a few 1099-NEC forms to file, do it online!

DiscountEfile.com allows you to type in your data, or import it from your accounting software, such as QuickBooks®.

Your forms are then automatically e-filed with the IRS and printed and mailed to recipients.

With just a few clicks, you’re done. 

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Blog Posts on 1099-MISC Filing

Decoding 1099-MISC Copy Requirements

1099-MISC ‘Copies’, or parts, report income to recipients and government agencies and help ensure accuracy of income tax filing. They include identical information about the payer and recipient, payments and withholdings, but each copy is given to a different entity. 1099-MISC Forms are filled out by the payer and provided to the recipient or a government agency.

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