What is 1099-NEC?

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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.

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Gary DeHart
Gary DeHart has worked in media for more than 25 years and has been instrumental in developing new revenue streams and business opportunities for the companies he has worked for. Prior to launching Insightful Accountant (formerly Intuitive Accountant), Gary was the Associate Publisher of Accounting Today. Prior to working in media serving the public accounting market, he worked in media for employee benefit managers and brokers, automotive design, textile manufacturing and recreational boating. In addition to being the Publisher and Managing Partner of Insightful Accountant, Gary works with select clients within the accounting market on channel development and growth. He is an Assistant Scoutmaster with the Boy Scouts of America, enjoys fly fishing, time on the beach, cooking on the Big Green Egg and spending time with his family.

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