Form 1099-NEC reports nonemployee compensation of more than $600 in a calendar year via check, bank, or money transfer, cash app, etc. If you paid a contractor via credit card, you do not need to file a 1099.
If you paid a contractor via credit card, you do not need to file a 1099-NEC because contractors that are paid through credit card companies will receive a gross income report from the credit card processor through a 1099-K.
Additionally, S corporations and non-profit organizations do not receive a 1099-NEC.
How does the IRS use 1099-NECs?
The IRS will total reported revenue on all the 1099 forms received under a taxpayer/business' Tax Identification Number. It's a way for the IRS to have a general idea of how much money a person should be reporting on their tax returns.
You should file 1099-NECs to report the amount of money you paid to contractors during the tax year.
When is Form 1099-NEC due?
The IRS deadline to file 1099-NECs is January 31. The IRS still accepts 1099s after this deadline; we highly encourage you to file your 1099s. If you do not file in time, an information return penalty may apply; see Information Return Penalties. The sooner you file, the less you’ll pay in late-filing penalty fees.
How to file Form 1099-NEC
There are several options available for filing Form 1099-NEC.
- If you use a payroll provider to issue payments to your nonemployee/contractors, you may be able to file directly through that platform.
- IRS E-fling option, Information Returns Intake System (IRIS), which also lets you file and make corrections for Forms 1099. To do so, you need an IRIS Transmitter Control Code (TCC).
- You may also file using an online filer such as Track1099 (https://www.track1099.com/).
How to complete Form 1099-NEC
- Box 1: Nonemployee compensation: Enter the total amount paid to the contractor during the year
- Payer’s TIN: Enter your business taxpayer identification number (TIN).
- Payer’s Information: Enter your business’s name and address in the top left section of the form.
- Recipient’s TIN: Enter the independent contractor’s TIN from their W-9.
- Recipient’s name: Enter the independent contractor’s name from their W-9.
- Street address: Enter the independent contractor’s address from their W-9.
- Box 4: Federal income tax withheld: Record any federal and state income tax withholdings, if applicable.
What if I received a 1099-NEC?
If you receive a 1099-NEC, it means that someone else contracted with you during the tax year and paid you for your services. You should upload the 1099-NEC (and any 1099 and other tax documents received) to the Annual Tax Questionnaire.
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