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:
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.
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.
· 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.