Do you know the changes made on printable Form 1099? If “No”, then as a business owner you must get updated to the IRS rules regularly. Because the IRS requires every business owner to report accurate information on tax forms. Along with accurate information, you must use respective information returns.
As per the IRS rules and regulations, from 2020 you must use Form 1099 NEC to report non-employee compensation. Federal 1099 MISC to report all other miscellaneous expenses made in a calendar year. Don’t get confused! We have provided information about the different 1099 Tax Forms. You can also find out whether NEC has replaced the Miscellaneous tax Form completely or not.
Are there different 1099 Tax Forms?
Yes, there are nearly two dozen tax returns in the 1099 series. Each printable Form 1099 reports a different type of income. But they serve a similar purpose. Usually, 1099 tax returns provide income information to the Internal Revenue service. Hence, they are called “information return forms”. Among all of them, a new tax form was added to the 1099 series to clear the confusion raised due to changes made in due dates. “Form 1099 NEC” was the new tax return revived back in 2020. Therefore, the IRS recommends every business owner file 1099 NEC to report the non-employee compensation made in a tax period. This means the new tax form will be used from 2021 to report the payments made in 2020.
Does Form 1099 NEC Replaces 1099 MISC completely?
No, 1099 NEC doesn’t replace 1099 MISC completely. According to the IRS norms, Federal 1099 NEC was revived back to replace 1099 MISC box 7. Along with this change, the IRS revised printable 1099 MISC boxes. Therefore, the payer who made non-employee compensation of about $600 or more in a tax year must use “Form 1099 NEC”. Generally, NEC includes prizes or rewards, professional fees, attorney fees, etc. Therefore, if you want to report miscellaneous income like rent, royalties, you must use the “1099 MISC Tax Form”. In case, if you report the miscellaneous income on 1099 NEC, then you may face the risk of getting penalized.
What is the 1099 Reporting Amount for 2021?
Given below are the details of the 1099 Reporting Amount for the commonly used tax forms in 2021:
Form 1099 MISC
Use 1099 miscellaneous tax form:
- When the payments made to an individual exceed $600 in a calendar year for services performed but not as an employee.
- $10 or more as royalties, broker payments instead of dividends, or tax-exempt interests, etc.
Federal 1099 NEC
Report the compensation paid to a non-employee of at least $600 or more in a tax year using “1099 NEC return”.
1099 K Tax Form
Use Federal 1099 K to report the payments made:
- Third-party networks of $20,000 in tax year with 200 individual transactions.
- $600 or more through payment cards like debit/credit cards etc.
Printable 1099 INT
Report all types of interest income and related expenses of $10 or more during the tax year using “1099 INT”.
Fill-able 1099 DIV
Use 1099 DIV Form to report:
- $10 or more dividends or distributions made in money or other property.
- $600 or more paid in money or property as a part of a liquidation.
Should I Use 1099 NEC or 1099 MISC?
According to IRS 2020 guidelines, you must use 1099 NEC to report non-employee compensation and 1099 MISC for miscellaneous income. But most of them get confused whether the income paid falls under miscellaneous income or NEC. So, with the help of the below information, you can identify the payments easily.
IRS Form 1099 MISC is used to report:
- Rents like machine rentals, pasture rentals, etc, prizes or rewards, other income payments, fishing boat proceeds.
- Medical & health care payments, crop insurance proceeds, attorney payments, 409A deferrals, Non-qualified Deferred compensation.
- Direct sales of consumer products on a buy-sell basis.
Use 1099 NEC Tax Form to report:
- Fees, commissions, prizes, and awards for performing services related to business or trade as a non-employee.
- Fish purchases for cash.
- Oil and gas payments for working interest.
- Payments made to vendors by the federal exclusive agency for services.
When to issue a 1099 Tax Form?
According to the IRS, the deadline to issue printable Form 1099 to the IRS and the contractor are different. Only for 1099 NEC, the due date to issue recipient copy and the IRS will be the same. Find out the deadline details below:
Recipient Copy B: January 31st every tax year.
Copy A to the IRS: February 28th for paper filing, March 31st for e-filing;
For 1099 NEC Tax Form: recipient copy & to the IRS by January 31st.
Please ensure to file on the next business day if the due date falls on Saturday, Sunday, or holiday.
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