Printable 1099 NEC Tax Form 2020 Overview: In this tax session millions of independent workers will receive 1099 NEC Tax Form in the mail for the first time. 1099 NEC Tax Form is the new Form to report non-employee compensation that includes payments made for independent contractor jobs, freelancers, etc.
Previously, businesses reported income paid to non-employees on Form 1099 MISC (Box 7). If you’re an independent contractor who has received Form 1099 MISC in the past, you’ll now receive Form 1099 NEC in the current 2020 tax year.
What are the 1099 NEC Tax Form reportable payments in 2020?
Beginning with the 2020 tax year, Printable Form 1099 NEC reports non-employee compensation. This new Form replaces Form 1099 MISC box 7, for reporting non-employee compensation. Additionally, there are no changes in the rules for determining income that should be reported as non-employee compensation versus other income types. This is a simply change in reporting mechanism. You’re required to file Form 1099 NEC, if the following four conditions are met:
Non-employee compensation about $600 or more during the calendar year.
You made payments to the person who is not treated as employee.
Payments made to the person for performing services on purpose of trade or business.
You made the payments to an individual, partnership, or an estate.
Who receives 1099 NEC Form in 2020 tax year?
In the 2020 tax year, 1099 NEC Tax Form is received by:
Business individuals send Form 1099 NEC to the non-employee for performing work on course of trade or business.
For example: If you paid a non-employee for designing the logo on purpose of business, then you need to send 1099 NEC Form. Payments made to a non-employee must exceed $600. Don’t file 1099 NEC Form for the payments below the minimum threshold amount.
A self-employed person is an independent contractor or sole proprietorship who reports self-employment income. A self-employed person is someone who earns their living from any independent pursuit of economic activity. File Form 1099 NEC with the self-employed individuals who performs work as a non-employee on course of business or trade.
An attorney is called as a law firm. Business individual’s file 1099 NEC Tax Form of $600 or more with attorney’s for performing legal services during the tax year.
For example: If you paid a law firm of about $600 for providing information against a criminal activity, the file form 1099 NEC with the attorney. Report the payments through the Form to the IRS.
1099 NEC Tax Form filling information
According to the IRS guidelines, the taxpayers require the following information to file Federal 1099 NEC Form:
This includes name of the taxpayer, address and mobile number.
This includes name of the recipient, address and mobile number.
Include the amount paid to the non-employee which are more than $600 in the box 1 under non-employee compensation title of the Form.
Include the payer’s and payee’s TIN in the respective boxes of the Form. TIN may be SSN or EIN. Payer must be sure that the enter TIN is a valid one. Otherwise, the Form may fall under backup withholding taxes.
Fillable 1099 NEC Form 2020 filing implications
Introduction of the Printable 1099 NEC Tax Form created complications for Form 1099 filers, it will likely require additional work to prepare for the filing season. Here are some potential complications:
As we know that, the IRS revived back 1099 NEC Form in the 2020 tax year. Due to this, the IRS didn’t include Form 1099 NEC in the CF/SF program. If the payer requires to file 1099 NEC with the state, the payer must submit a separate state filing in the format required by each state.
Composite recipient statements
In most of the cases, the payees receive non-employee compensation along with other income reportable on the Form 1099 MISC. From past few years, these payees received a single recipient statement.
In January 2021, taxpayers must send two separate statements:
- One for non-employee compensation on Form 1099 NEC.
- One for other Form 1099 MISC reporting miscellaneous income.
Note: these two statements are not combined in to a single Form in the 2020 tax year.
Multilevel marketing filers
Generally, multilevel marketing firm’s issue a significant 1099 MISC Form reporting non-employee compensation. Additionally, the payer’s used to check box payer made direct sales of $5,000 or more.
But now from 2020 tax year, these recipients receive 1099 NEC Form and a separate 1099 MISC Form.
Where do you send 1099 NEC Form in 2020?
You need to know where to send Form 1099 NEC online in 2020. Like Form 1099 MISC, there are multiple copies of Form 1099 NEC you must distribute.
Check out each copy and its recipient below:
- Submit the Copy A of Form 1099 NEC to the Internal Revenue Service.
- Issue Copy 1 to the State Tax Department, if you’re state requires to file 1099 NEC Form.
- Furnish Copy B of the Form to the recipient to whom the non-employee compensation was paid.
- Copy C of the Form is kept in the payer’s business records.
You can file 1099 NEC electronically, or you can mail it to the IRS. Submit the respective 1099 NEC Form with the IRS and to the recipient by February 1st, 2021.
Note: The due date for paper filing and electronic filing is the same.
Form 1099 NEC exempted recipients
Exempted recipients of 1099 NEC Form are:
- Don’t file 1099 NEC Form to report employee wages.
- Don’t use 1099 NEC Form to report payments made to corporations.
- 1099 NEC Form don’t reports the payments made below $600.
- Don’t include payments made for the merchandise, telegrams, telephones etc.
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