What is the 1099-NEC?
The 1099-NEC is the informational and new way to report Non- Employee Compensation. The Internal Revenue Service (IRS) reintroduced and began using it again in 2020. It replaces the 1099-MISC for self- employment income.
If you are self- employed, you can expect to receive one of these forms postmarked by January 31, 2023; expect to receive this form too, if you or your business received more than $600 from a business you had worked with during 2022.
You must report and file with the Internal Revenue Service and the recipient if they meet the following four conditions:
- Payment to someone who is not your employee
- Payment is made for the services as a matter of course of your trade and business
- Payment must be an individual, partnership, limited liability company, estate and under certain circumstances a corporation.
- The payment must be greater than $600.00 for the taxable calendar year.
Please note: The Fform W-9 filed by the non-employee with the name, address and identifying number (SSN-social security or EIN-Employment Identification Number) is what is going to be reported to the Internal Revenue Service. Please check your Form W-9 for accuracy.
What is Non- Employee Compensation?
Non- employee compensation can be the fees, benefits, commissions for services performed by a non-employee. Other forms of compensation must be reported for services performed by non-employees.
A Look at Form 1099-NEC
1099- NEC Box 1 is subject to self- employment tax.
Payers of the non-employee compensation must file the form 1099-NEC by January 31. There is not extension unless business meets certain hardship rules.
What You Need to Do
You may want to consult our tax expert at 1099 Accountant, if you have an amount in one of those boxes for proper treatment and filing in your annual returns.
Work with us at 1099 Accountant, we offer online bookkeeping, tax and accounting services. We are experts who understand independent contractors, freelancers and one person businesses.
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