Before 2020, if your business hired contracted workers or freelancers then you issued 1099-MISC Forms Online. Now Form 1099-NEC Filing can be done for reporting independent contractor income, what is officially known as “non-employee compensation.” If you appoint contractors or contract with non-profits, this blog is for you!
The 1099-NEC was reintroduced to address confusion created by the PATH (Protecting Americans from Tax Hikes) Act of 2015 which established different due dates for the various types of income reported on the 1099-MISC, leading to unexpected penalty notices for filers. The renewed 1099-NEC form separates out nonemployee compensation from other sections of the 1099-MISC and imposes a filing deadline of Jan 31, 2023.
What is Form 1099-NEC?
As mentioned, the 1099-NEC Form is a relatively new form used specifically to report non-employee compensation. The IRS currently describes this as payments to individuals not on payroll on a contracted basis to complete any such project or assignment. This could include independent contractors, gig workers, or self-employed individuals who previously had any payments to them reported on box 7 of a 1099-MISC form.
1099-NEC vs. 1099-MISC
Although 1099-NEC Form Online is now used to report independent contractor income, the 1099-MISC Form Online is still around. It is used to report miscellaneous income such as rent or payments to a counselor.
The due date for the 1099-NEC is January 31st, 2023. The 1099-MISC recipient copy is due on Jan 31st, 2023 if you don’t fill Box 8 or Box 10. if Box 8 or Box 10 value is entered then the due date for sending the recipient copy is Feb 15th, 2023. It is due Feb 28th, 2023 if filed by paper and March 31st, 2023 if filed electronically. Just as with the 1099-NEC deadline, if these dates do not fall on a business day, they will be extended to the next business day.
Who requires a Form 1099-NEC?
If your business hired a contractor and paid them more than $600 in a year, it’s your responsibility to file a Form 1099-NEC with the IRS and send a copy to the contractor. However, if the independent contractor is registered as a C-corp or S-corp, a 1099-NEC will not be required.
You do not have to file a Form 1099-NEC for the employees for paying the wages, tips, and other compensation during a tax year. Instead, a Form W-2 Online would be submitted to ensure it captures information on taxes paid by both the employee and employer. If you would like more information on the difference between employees vs. contractors, check out our blog on this topic!
Who requires 1099-MISC?
If an individual or LLC was paid at least $600 or more during a year in rent paid, legal settlements, or prize or award winnings by your organization, you are required to file a 1099-MISC with the IRS and mail the recipient copy.
Who files the Form 1099-NEC Online?
If your non-profit hired a contractor and paid them $600 or more in a year, they will need to file a Form 1099-NEC with the IRS and send a copy to the contractor.
How do you file Form 1099-NEC?
You currently cannot download a 1099-NEC Form Online. You will have to order forms from the IRS website or file them online using the IRS FIRE system. Use the service of Taxseer.com, a leading IRS-approved eFile vendor, to file form 1099-NEC online to electronically transmit form data to the IRS system within minutes. You can also choose the mail service option to automatically mail the recipient copies before the IRS due date of 31st Jan 2023.
At TaxSeer, our Tax Team can help you get your tax filings out of the way so you can focus on managing your business. We provide the Excel bulk upload feature to load all your 1099 & W-2 data through the Taxseer-defined Excel format to automatically generate the IRS/SSA Forms and eFile with a single click.
Taxseer (www.taxseer.com) is a leading IRS-authorized e-file service provider offering you the best cloud-based solutions to perform online filings of Form 1099 NEC, 1099 MISC, 1099 Series, W-2, ACA (1095-B & 1095-C), 2290, 8849, 8809, W-9 and many more. We provide Wizard-driven e-filing for guided and error-free submissions and extend the security, intelligence, availability, and agility of the tax solution on the cloud. SSL-encrypted connections are used for transferring sensitive information and providing a very safe environment for clients. As part of our commitment to making e-filing easy and convenient, we are always available.