1099-NECs are for non-employee compensation above $600 during the entire year paid for via check, bank/money transfer, cash app, etc.
There are some considerations to consider if the 1099-NEC filing process is applicable to you. 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.
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 find 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 an 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 an 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 if I do not have the contractor’s EIN number?
You can request the EIN number from your contractor. If this contractor has a Business Name and is a business entity, you'll enter their EIN. Otherwise, enter their SSN. These identification numbers can be found in the contractor's completed W-9.
What if I receive an SSN error?
We recommend requesting a W-9 from your contractor. This will provide you with accurate information to submit a 1099-NEC for that contractor. If you have entered the information from the W-9 to Heard, verify there are no typos. If you are still receiving an error, this means there is an issue on the IRS side, for example, if your contractor has recently changed their last name. We recommend contacting the IRS to rectify and update the info on Heard. If you keep receiving this error and it is taking a long time to address it between your contractor and the IRS, we recommend filing outside of Heard. The IRS requires 1099-NEC to be filed and sent to your contractor by January 31st, 2024. If you do not file in time an information return penalty may apply, see Information Return Penalties.
What happens after I fill in information for my contractor in Heard?
Please note: It is important you send this form to your contractor as soon as possible, as they can't file their taxes without this form.
Where can I download the 1099-NEC for my contractor?
If your filings have been processed successfully, you can download the filed 1099-NEC by going to Your Business > Documents > Taxes and then locating the file by the contractor's name.
When is the 1099-NEC form due to my contractors?
You are required to issue a filed 1099-NEC to your contractor by January 31st. We recommend sending it as soon as possible, as your contractor will not be able to file their taxes without this form. To do this, you will need to download the form from your Heard account and mail it to your contractor.
What if I received a 1099 for my work as a contractor?
You will need to upload this during your Annual Tax Checklist. You can begin working on your annual tax prep immediately and upload it when requested.