2020 tax reporting has a new requirement that will impact tax professionals and business owners. The new requirement, Form 1099-NEC has replaced Form 1099-MISC box 7 data for reporting non-employee compensation beginning with the reporting of 2020 tax info.
The High Level Picture: The new 1099-NEC will capture payments of $600 or more to service providers — typically work done by an independent contractor who is a sole proprietor or member of a partnership. Examples include graphic designers, web developers, cleaning professionals, freelance writers, landscapers, home health care assistants and other self-employed individuals.
It’s important to note that you must also file Form 1099-NEC (report in box 4) for anyone you withheld federal income tax under the backup withholding rules, regardless of the amount.
Want more detailed information? Visit the eFile4Biz site for a detailed explanation of when to use the new form and when to use the old form, along with filing dates, etc. Or visit the IRS Instructions page.