As part of your growth strategy, you may have decided to hire independent contractors to be included in your business solution. Good idea – some of the best talent in our economy exists in the form of independent contractors. From graphic design, to landscaping, to administration, independent contractors can provide small businesses with a wealth of support. However, when tax season comes around, these independent contractors are seen differently than your regular employees in the eyes of the IRS.
“But I’m the creative force behind our company’s growth!” you might say. “I need to spend my time (and money) focusing on our next big idea or how I’m going to tackle the challenges we’ll face in the coming year.” Fortunately, TaxSeer.com, a leading IRS-authorized online filing service provider, has you covered. Our low-cost, secure model for your 1099 NEC Online Filing and other forms makes tax season easy and convenient for you.
So, sit down, get comfortable, grab a cup of your favorite hot beverage, and let’s get started.
What is Form 1099-NEC?
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 Online 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 Form 1099-MISC. Box 7, where nonemployee compensation was once reported, now it shows the check box for direct sales of $5,000 or more. The deadline for filing the 2022 tax year’s 1099-MISC is March 31, 2023, if filing electronically.
What are the required information to complete 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 Jan 31, 2023.
The new version of Form 1099 MISC, which will no longer include non-employee compensation, will follow the February 28 and March 31 filing deadline for paper and electronic returns, respectively.
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
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.