1099’s Are Done

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:
    1. Rents
    2. Prizes and awards
    3. Other income payments
    4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
    5. Any fishing boat proceeds
    6. Medical and health care payments
    7. Crop insurance proceeds
    8. Payments to an attorney
    9. Section 409A deferrals
    10. 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