Beginning with the tax year 2020, a 1099-NEC must be used to report nonemployee compensation. Prior to 2020, this information had been reported in box 7 on a 1099-Misc.
Payments should be reported as nonemployee compensation if:
- Payments were at least $600 in the year
- Payment was made to someone who is not your employee
- Payment was for services provided during the course of your trade or business
- Payment was made to an individual, partnership, or estate
Some examples of vendors who may receive a 1099-NEC would be snow removal, lawn care, repair and maintenance, and professional services such as attorneys and accountants.
1099-NEC’s need to be provided to the payee and filed with the Internal Revenue Service (IRS) by January 31 or, if this lands on a weekend, the following Monday.
If you have questions or need assistance with filing your 1099s, please contact us.