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There’s A New Form In Town - Form 1099-NEC

Attention all independent contractors, self-employed, and gig workers! In January 2021, you will receive a new tax form. Well, it’s a newly resurrected spin on an old favorite.


For contractors, your old Form 1099-MISC is now Form 1099-NEC. NEC stands for NonEmployee Compensation and it’s the only thing reported on this form.


The last time the IRS used Form 1099-NEC was back in 1982. And it looked like this:

Source: IRS.gov


What Is Form 1099-NEC?


Form 1099-NEC is used to report compensation provided to nonemployees. Your clients previously reported your compensation amounts in Box 7 of Form 1099-MISC, but it will now be shown in Box 1 of Form 1099-NEC.

Source: IRS.gov


When Is Form 1099-NEC Used?


Just like with the old Form 1099-MISC, the rules for issuing a 1099 to contractors don't change.


If you:


· Received compensation for services in the course of your business, and

· Own a business as a sole proprietorship, partnership, or single-member LLC, and,

· Received $600 or more from a client


Then you’ll receive a Form 1099-NEC.


What Happens If You Don’t Receive Your Form 1099-NEC?


Hopefully, your client won’t try to send you a 1099-MISC. But they will quickly learn their mistake because the box to report nonemployee compensation is no longer on Form 1099-MISC.


Your client must mail out 1099’s by the last day of January, so if you don’t receive your 1099-NEC by the beginning of February, consider contacting your client for a duplicate copy.


But thankfully, you don’t need your 1099 to file your taxes. Unlike W-2s, you don’t have to submit your 1099s with your tax return.