IRS Form 1099 NEC Filing Deadline for the Tax Year 2021

Whew…2021 is behind us and there is no denying the fact that it affected all strata of society. As we look forward to 2022 with hope and optimism, it is important to also remember the positives from last year. We fully witnessed resiliency and adaptability among everyone to cope up with the dire situation. That means it all gets easier now, right?

Not exactly. But in truth, it wasn’t all bad. As the novel coronavirus (COVID-19) continues to spread globally, its societal impact is reshaping the way businesses operate. As part of this, the IRS and States are amending their policies to make the reporting easier and avoid any complexities in the process. One of the important changes from the Tax Year 2021 is the introduction of Form 1099 NEC Online for easy reporting of nonemployee compensation and eliminating confusion over the filing deadline.

IRS Form 1099 NEC filing deadline for the Tax Year 2020
IRS Form 1099 NEC Filing Deadline for the Tax Year 2021

While all these adjustments are happening, it is important that you are aware of your IRS related tax compliance deadlines along with the new policy changes. There is a lot that needs to be done this tax year and things are not going to be easy at all with the addition of the new form 1099 NEC in the 1099 form series. You can view the updates to the 2021 General Instructions for Certain Information Returns (irs.gov) and the General Instructions for Certain Information Returns (2021) | Internal Revenue Service (irs.gov) here.

About the new Form 1099 NEC introduced in the IRS Form 1099 Series

From the tax year 2021, the IRS has moved all nonemployee compensation (NEC) income reporting from the traditional Form 1099 MISC Online Box 7 to the new form 1099-NEC. All other boxes to report different income types on the traditional Form 1099-MISC still remains the same. There is some shuffling of the boxes on the form 1099 MISC to account for Box 7 that was removed. Other than this, the Form 1099-MISC is mostly the same and can be used to report income types such as rent, other income, or royalties.

In recent years, IRS found significant fraud by individuals submitting tax returns with sizable refund requests using falsified Forms 1099-MISC. They were reporting small amounts of nonemployee compensation but large amounts of withholding. These tax returns used to be submitted and processed before the March 31 filing deadline for form 1099, making it impossible for the IRS to match recipient statements with payer copies of the form 1099.

To overcome this issue, the IRS made some policy changes regarding the 1099 filings and advanced the 1099-MISC IRS reporting deadline for nonemployee compensation to January 31. However, these changes created issues for filers as there were filing deadline confusion and filing errors in the IRS e-file system and wrongly penalized the filers.

To avoid further chaos, the IRS resurrected the 1099-NEC From Online the tax year 2021. It is to be noted that Form 1099-NEC is not a new form and it was used till early 1982 before it was replaced by Form 1099-MISC.

Purpose of Filing Form 1099 NEC Online

Businesses that pay $600 or more during 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

Tax Year 2020 Filing Implications

The resurrection of 1099 NEC Form Online For 2021 will have some complications for forms 1099 filers, and it will require significant effort to prepare for this filing season. Some of the important issues are:

State Reporting

Form 1099-NEC has not been included in the Combined Federal-State Filing Program by the IRS. A separate state filing will be required based on the format required by each jurisdiction.

Multiple Recipient Statements

From this year, filers must send two separate statements to the payees if the 1099 forms had payments for nonemployee compensation and other reportable income. In the previous years, these recipients received a single recipient statement. Under the rules listed in the IRS publication 1179, these statements should not be combined into a single recipient statement for 2021 reporting.

Due dates for the Form 1099-NEC

As of January 31, 2022, falls on a Sunday, the due date for filing the 1099-NEC Recipient copy, IRS e-file, and IRS paper filing is Feb 1, 2022.  There is no automatic extension

What is reported in the new 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 Box 1 to enter the Non-Employee Compensation for $600 or more. Use Box 4 to enter the backup withholding information.

E-File Form 1099 NEC for the Tax Year 2020 with Taxseer

No one enjoys the stress of tax season, especially when you’re running your own small business. But whether you’re filing taxes on your own or are supported by a small accounting team, TaxSeer.com is here to help.

Taxseer provides options to eFile Form 1099 NEC Online to the filers through the proven forms engine that mimics the paper forms. Filers generally used to perform form 1099 paper filing with the IRS find the Taxseer online editable forms very easy to use guided by the tax wizard to complete the error-free form. The ease of Filing 1099-NEC Form Online without any support from anyone makes Taxseer a truly self-service efile system for the filers or tax professionals.

As part of our commitment to making e-filing easy and convenient, we are always available. Contact us today to learn more about how our model is best suited to your small business needs.

For starters, learn the 5 Easy Steps to e-File Form 1099-NEC Online through Taxseer.

About Taxseer

Taxseer is a leading IRS-authorized e-file service provider offering you the best cloud-based solutions to perform online filings of Forms 1099 series, W-2, ACA (1095-B & 1095-C), 2290, 8849, 8809 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 to provide a very safe environment for clients. As part of our commitment to making e-filing easy and convenient, we are always available.

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