Unless you are certified tax nerds like us you may have missed a new and (not so) exciting change to the world of 1099 filing. The federal government has created a new form, called form 1099- NEC. This form was created specifically to report payments made for Non-Employee Compensation (hence 1099-NEC).
What is NEC?
- Payments for compensation, commissions, fees, prizes and awards for services performed. Commonly known as payments to subcontractors or contractor payments.
- Reimbursements or payments for goods does not count for these tests
- The payments must be $600 or more for an annual period, not including amounts not considered (see above).
- Paid by a business (individuals are not required to issue a 1099’s in most cases)
- The individual or business receiving the 1099 has not already been paid as an employee for these payments
- The business whom would receive the 1099 is not incorporated. Corporations and S Corporations do not need to receive 1099’s annually.
You will notice, however that there is still something called a 1099-MISC form. On the 1099-MISC form you would report other payments as per prior filing requirements, just not for form 1099-NEC recipients.
We help many other individuals and businesses with tax reporting, general tax compliance and advice. If you do not feel comfortable taking care of these filings, reach out to us at [email protected].
Anthony Momany, Managing Member, Capstone CPA Group PLLC