There are all kinds of considerations to make when figuring out if the 1099-NEC filing process is applicable to you. We've condensed them into this list for you to check out below.
It's a good idea to double-check that you do in fact need to file a 1099-NEC. In the event that you filed a 1099-NEC in error, you'd have to file an amendment to the IRS (and we want to prevent that).
Who needs to file a 1099-NEC?
A 1099-NEC stands for non-employee compensation. You file a 1099-NEC for a contractor who fits the following criteria:
- You've paid the contractor over $600.
- They're an independent contractor, LLC (single member or partnerships), PLLC or sole proprietor.
- You paid them in cash, checks or bank transfers.
*If the business entity is a corporation or payroll provider, you do not need to file a 1099-NEC.
Is filing a 1099-NEC in Heard for me or for my contractor?
For Heard's 1099-NEC service, we're filing a 1099-NEC for your contractor. If you were someone else's contractor and you fit the above criteria, then the agency or whomever you worked with will file a 1099-NEC and send it to you to file with your own tax return.
What are examples of typical contractors that therapists hire?
- Seasonal helpers that come in for a specific project or time period
- Consultants that help with marketing, business development, or other business related areas
- Lawyers
- Rent
I paid my contractor with Venmo, Zelle or Cashapp. Do I need to file a 1099-NEC for them?
If your contractor isn't an S corporation or C corporation, and you paid them over $600, then yes. You'll need to file a 1099-NEC for them.
What if my contractor is a larger corporation, like Gusto or Simple Practice?
You don't need to file a 1099-NEC for large companies.
Where do I found out my contractor's tax entity?
In box 3 of their W-9 form.
What if my contractor's tax entity is a S corporation or a C corporation?
You'll need to file a 1099-MISC for your contractor. You can find out more information and instructions here.
What if my contractor's tax entity is a sole proprietor?
If you paid them over $600 in cash, checks or bank transfers, then you'll need to file a 1099-NEC for them.
What if my contractor's tax entity is a single-member LLC?
If you paid them over $600 in cash, checks or bank transfers, then you'll need to file a 1099-NEC for them.
What if my contractor's tax entity is a LLC partnership?
If you paid them over $600 in cash, checks or bank transfers, then you'll need to file a 1099-NEC for them.
What if my contractor is a LLC, but they're taxed as an S corporation?
You'll need to file a 1099-MISC for your contractor. You can find out more information and instructions here.
What if I paid my contractor through a payment processor (i.e. Ivy, Stripe, Visa, Square, Clover, Paypal)?
You don't need to file a 1099-NEC for them. The payment processor will do that for you.
What if I paid my contractor through a payroll provider (i.e. Gusto)?
You don't need to file a 1099-NEC for them. The payroll provider will do that for you.
What if I paid my contractor less than $600 last year?
You don't need to file a 1099-NEC for them.
What happens after I fill in information for my contractor in Heard?
Please don't procrastinate in doing this. Your contractor can't file their taxes without this form.