Revised 1099 MISC Form 2020: Did you heard about 1099 MISC with NEC revived back in new 1099 NEC Form? If your answer is “No”, then once check in the IRS websites about the revised 1099 MISC Form in 2020 tax year. Due to filing complications, the IRS has brought back old 1099 NEC Form to report NEC. By eliminating 1099 MISC box 7 NEC, the IRS has revised 1099 MISC Form boxes in the current tax year.
We’ll let you know about the boxes revised in 2020 tax year. Every business individual must file 1099 NEC to report non-employee compensation made in 2020 tax year. Taxpayers can use 1099 MISC Form to report all the miscellaneous income made during the prior year.
What do you report through updated 1099 MISC Form?
Generally, taxpayers use Form 1099 MISC to report payments of $600 or more made by trade or business to independent contractors. These payments include:
- Rents paid for office space, machine rentals, coin operated games etc.
- $10 or more paid for royalties. This includes trademarks, copy rights, trade names, patents and intangibles.
- Payments made to third party of about $600 or more during the year.
- Profits from Indian gaming, prizes and awards, taxable damages and other income exceeding USD 600.
- Payments made to a doctor or other provider or supplier of health care or medical services of at least $600.
1099 MISC Form changes from prior year
The most significant change in 1099 MISC Form for the 2020 tax year is the break out of non-employee compensation from box 7 to new Form. Compared to previous years, in the current year the taxpayers can easily report non-employee compensation through revived 1099 NEC Tax Form.
From past few years, before the enhancement of PATH Act taxpayers were able to file one Form 1099 MISC to report non-employee compensation as well as miscellaneous income by March 31st every year. In 2015, the PATH Act accelerated the due date for reporting non-employee compensation from February 28th to January 31st for both paper forms and e-filing. It also eliminated the automatic 30 days filing extension for forms reporting non-employee compensation. As a result, the IRS reinstating Form 1099 NEC to alleviate these issues.
1099 MISC Form e-filing requirement update
Following are the e-filing requirement updates in 2020 tax year:
E-filing information return Forms
IRS has updated e-filing information return forms from 100 to 250. This means the taxpayers who are filing 1099 MISC Forms of 250 or more must choose electronic filing.
IRS allows automatic extension for certain 1099 Forms. From past few years, there is no automatic extension for filers who are reporting NEC through 1099 MISC Form. But now, the filers can file an extension request for reporting miscellaneous income through 1099 MISC Form. There is no automatic extensions for 1099 NEC Form.
As we know that, the penalty amount has been increased in the current tax year compared to the prior year. Failure to comply with the various filing deadlines and requirements may expose a business to the significant penalties. IRS imposes heavy and hefty penalties for late filing 1099 information returns. Revised 1099 MISC Form boxes
Following are the 1099 MISC Form boxes revised in 2020:
In the 2020 tax year, payers check box 7 to report direct sales of $5,000 or more consumer products for resale instead of box 9. As we know that, box 7 payments reporting NEC are revived back to new 1099 Form. Use 1099 MISC Box 7 to report direct sales of consumer products for resale on deposit-commission basis.
Crop insurance proceeds
Compared to the prior year, the taxpayer report crop insurance proceeds in box 9 instead of box 10. Enter crop insurance proceeds of $600 or more paid to farmers by insurance companies.
Gross proceeds paid to attorneys
Use 1099 MISC Box 10 to report gross proceeds paid to attorneys, instead of box 14. Enter the gross proceeds of $600 or more paid to an attorney in connection with legal services.
Non-qualified deferred compensation
Report non-qualified deferred compensation through box 14 of the Form. enter all the amounts deferred that are includible in income under section 409A.
Boxes 15-17 report state information. Payer use these boxes to report state tax withholding. These boxes include state tax withholding amount, state ID and name of the state.
What do you report through revised 1099 MISC Box 7?
From past few years, payers used 1099 MISC Box 7 to report non-employee compensation paid during the year. According to the IRS 2020 instructions, payers use 1099 MISC Box 7 to report direct sales made during the calendar year. The payers who made direct sales of $5,000 or more of consumer products to a person on buy-sell, deposit-commission for resale needs to check box 7 of the Form. the resale of consumer products by the buyer or other person is anywhere other than in a permanent retail establishment. Make sure that not to enter a dollar amount in the box 7.
1099 MISC Form payments deadlines
Every business individual must file 1099 MISC Form with the IRS on paper or electronic filing and must provide a copy to the recipient. Following are the 1099 MISC Form payments deadlines:
Furnish the recipient copy of non-box 8, 10 payments by February 1st, 2021.
1099 MISC Form reporting box 8, 10 payments are issued to the recipient by February 16, 2021.
Paper file 1099 MISC Form with the IRS by March 1st, 2021.
File 1099 MISC Form electronically with the IRS by March 31st, 2021.
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