1099 NEC Form Online For 2021

Form 1099-NEC is a variant of Form 1099 used to report Non-Employee Compensation to the contractors. Now, the IRS has moved all non-employee compensation (NEC), defined as payments of $600 or more to independent contractors, income reporting from Box 7 of the Form 1099-MISC to the new 2020 Form 1099-NEC. All other traditional Form 1099-MISC income types, such as rent, other income, or royalties will continue to be reported on the Form 1099-MISC. However, there are no changes in the rules for determining income that should be reported as non-employee compensation versus other income types such as rent, other income or royalties. The introduction of Form 1099-NEC in 2021 is simply a change in the reporting mechanism to avoid filing deadline confusion and plug any possible fraud through 1099-MISC filing.

The boxes have been now rearranged on the Form 1099-MISC. Box 7, where nonemployee compensation was once reported, and now it shows the check box for direct sales of $5,000 or more. The deadline for filing the 2020 tax year’s 1099-MISC is March 31, 2021 if filing electronically.

Purpose of Filing Form 1099 NEC

Businesses that pay $600 or more in the course of trade or business to independent contractors for services will be impacted by this change. The form 1099-NEC will cover payments to consultants like architects, attorneys, accountants, and any non-employee sales commissions. Payments by federal, state, or local government agencies are also reportable but personal payments are not.

You must generally report a payment as NEC when you meet the following conditions:

  • You made the payment to an independent contractor who is not your employee. However, if the independent contractor is registered as a C corporation or S corporation, a 1099-NEC will not be required
  • You made payments of at least $600 to the recipient during the year
  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations)
  • You made the payment to an individual, estate, partnership, or, in some cases, a corporation

What are the required information to complete the Form 1099-NEC?

Form 1099-NEC has Payer's information (Name, Address, and TIN), Receiver's information(Name, Address, and TIN) and the boxes to report Box 1 (non-employee compensation), Box 4 (Federal Tax withheld), and Boxes 5-7 (State information). Use the Box 1 to enter the Non-Employee Compensation for $600 or more. Use the Box 4 to enter the backup witholding information.

What are the due dates for the Form 1099-NEC?

The due date for filing the 1099-NEC Recipient copy, IRS e-file, and IRS paper filing is Feb 1, 2021.

What are the penalties for missing the Form 1099-NEC filing deadline?

The penalties for delay in filing form 1099-NEC are:

  • $50 if filed within 30 days
  • $100 if filed more than 30 days late, but before August 1
  • $260 if filed on or after August 1

Form 1099 Extension

If your company needs more time to file your 1099-series forms, then you need to apply for an extension using Form 8809. There are two types of extensions:

  • Extension for filing 1099 forms with the IRS
  • Extension for delivering 1099 forms to recipients

If you plan to file Form 1099-NEC reporting non-employee compensation payments, you must request an extension no later than January 31.

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