The dreaded task every year – 1099’s. 2020 was a crazy year with so many shake-ups and changes. Fittingly, there were changes in the 1099 filing process, too. For the financial community, this meant the new form 1099-NEC (Non-Employee Compensation) in addition to form 1099-MISC.
Beginning with the 2020 tax year, Form 1099-NEC is required for reporting payments for services of $600 or more to non-employees. Examples of non-employees could include independent contract workers, fees paid for professional services such as accountants, and freelancers.
According to the IRS, file Form 1099-MISC, Miscellaneous Income, is for each person in the course of your business to whom you have paid the following during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
- At least $600 in:
- Prizes and awards
- Other income payments
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
- Any fishing boat proceeds
- Medical and health care payments
- Crop insurance proceeds
- Payments to an attorney
- Section 409A deferrals
- Nonqualified deferred compensation
Employers must provide the Form 1099-MISC to the recipient by February 1 and to the IRS by March 1.
With MH&Co.’s Financial Management System (FMS), you can rest assured we are staying on top of procedural changes, filing updates, and the latest news in the government finance world. MH&Co. takes the dread out of your year-end tax filing.
-Eve Steele, Marketing Manager