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The 1099-NEC form is required for all non-employees who earn $600 or more in a year from your company. Read more to learn who qualifies, when to file, and what will happen if you fail to file the 1099-NEC form by the deadline.

What Is a 1099-NEC Form?

A 1099-NEC form is used to report non-employee compensation. Businesses must complete a 1099-NEC form to inform the IRS of any compensation paid throughout the year to an individual who was not a direct employee of the company. Examples include freelancers, gig workers, contractors, consultants, etc. Reporting compensation from the previous year is due by January 31.

Who Gets a 1099-NEC Form?

The 1099-NEC is required for each US-based non-employee who meets all of the following qualifications.

Earned at Least $600

If a non-employee earned $599 or less throughout the year, a 1099-NEC form is not required.

Not Your Employee

Because employees complete a W-2 for their tax information, a 1099-NEC is only required for non-employees.

Paid for Business Services

Throughout the year, the non-employee was paid $600 or more for services such as training courses, janitorial services, labor, or payments of legal fees to an attorney.

Individual, Partnership, or Estate

The non-employee doesn’t have to be an individual contractor. A partnership or estate who has provided services for more than $600 throughout the year must also receive a 1099-NEC form.

How to File a 1099-NEC Form

The 1099-NEC form can be filed online or by mail. It can be downloaded or completed as a fillable PDF on the IRS website. The deadline to file with the IRS and send the form to the non-employee is January 31.

Step 1: Download or Complete Using IRS Free File

The form can be downloaded to your computer or completed using a fillable online PDF format using IRS Free File at IRS.gov.

Step 2: Information needed

To complete the form, you will need the non-employee’s total compensation earned over the year. Remember, it must be more than $600. This compensation amount includes fees, commissions, and prizes for services performed.

You will also need your TIN (Tax Identification Number), the individual’s TIN, the individual’s name and address, and the amount of any taxes withheld.

Step 3: Provide to Payee

Once you’ve completed and filed the form, send the form to the non-employee.

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Questions You’ve Asked Us About 1099-NEC Forms

Employers must supply the complete 1099-NEC form to the payee and file with the IRS by January 31.
The 1099-NEC form can be found on the IRS website at https://www.irs.gov/forms-pubs/about-form-1099-nec.
The 1099-NEC is a new form created by the IRS rolled out in 2020. It’s used to report non-employee compensation. The 1099-MISC form was used prior to 2020 for non-employee compensation. Now the 1099-MISC (https://www.irs.gov/forms-pubs/about-form-1099-misc) is used for reporting miscellaneous information, such as payments of at least $10 in royalties or broker payments or at least $600 in rents, prizes, medical care payments, or payments to an attorney. The 1099-MISC is no longer used for services performed.
If the 1099-NEC isn’t filed by January 31, there is a $50 filing penalty per form if you file within 30 days of the due date. If you file after 30 days but before August 1 of that year, the penalty is $110 per form.

Alaura is an espresso-addicted HR professional who loves improving processes and providing the best experience to employees. She focuses on performance management, compensation best practice, and leadership coaching and strategy. When not working, she loves playing video games and making sourdough bread.

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