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Self-employed individuals should not see personal payments made to them during the year on the new form. What details do I need to know about the 1099-NEC form update?

Other forms of compensation for services performed for your trade or business by an individual who is not your employee.

Prizes and awards for services performed by a nonemployee.

The payment total is at least $600 for the yearĪdditionally, businesses will need to file Form 1099-NEC if the business has withheld any federal income tax under the backup withholding rules regardless of the amount of payments for the year to the nonemployee.

The payment is made to an individual, partnership, estate, or in some cases a corporation.

The payment is made for services in the course of your trade or business.

The payment is made to someone who is not your employee.

The IRS explains that, in general, you must report payments you make if they meet the following four conditions: In order to help clarify the separate the various filing deadlines when reporting different types of payments on Form 1099-MISC, the IRS decided to reintroduce Form 1099-NEC which has a single filing deadline for all payments that use the form. These payments generally represent nonemployee compensation and, up until now, would typically appear in box 7 of 1099-MISC. Since then, prior to tax year 2020, businesses typically filed Form 1099-MISC to report payments totaling $600 or more to a nonemployee for certain payments from a trade or business. You should receive these forms by January 31 each year and use them to prepare your tax return.īefore its reintroduction, the last time form 1099-NEC was used was back in 1982.You can expect to receive this new form from a business that paid you $600 or more for nonemployee compensation in tax year 2020 or later.

Businesses will use this form if they made payments totaling $600 or more to certain nonemployees, such as an independent contractor. Beginning with the 2020 tax year, the IRS will require businesses to report nonemployee compensation on the new Form 1099-NEC instead of on Form 1099-MISC.