What is Form 1099-NEC?

IRS Form 1099-NEC is the tax form used to report to report non-employee compensation for tax year 2020 and beyond. Before the year 2020, the form used to report this kind of income was the 1099-MISC.

Here’s what you need to know about the 1099-NEC if you’re a contractor or an employer.  

What info is on Form 1099-NEC?  

IRS Form 1099-NEC is used to report any compensation paid to non-employees by a company. Note: The IRS separated this income from Form 1099-MISC beginning with tax year 2020 (returns filed in 2021). 

There are five sections on Form 1099-NEC. Those are:  

  • Payer’s information  
  • Recipient’s information  
  • Non-employee compensation amount  
  • Federal income tax withheld  
  • State information  

Non-employee compensation will be reported in Box 1. 

Box 4 will report any federal income tax withheld. This box should be blank unless you had backup withholding.  

Box 5 will report any state income tax that was withheld from the compensation.  

See the complete form here. 

What is non-employee compensation? 

Non-employee compensation is defined as money paid to an independent contractor for work performed. Common examples include: 

  • Fees 
  • Commissions 
  • Prizes 
  • Awards for services 

What is the difference between Form 1099-NEC and Form 1099-MISC?  

Prior to 2020, Form 1099-MISC was used to report payments, including non-employee compensation. Beginning with tax year 2020, non-employee compensation is no longer reported on Form 1099-MISC. Instead, employers should use Form 1099-NEC.  

I’m a business owner. Do I need to file Form 1099-NEC for my workers 

All businesses are required to file Form 1099-NEC form for non-employee compensation if the following conditions are met: 

  1. You paid someone who is not your employee 
  1. You paid for services rendered during trade or business (including government agencies and nonprofit organizations) 
  1. You paid an individual, a partnership, an estate, or, in some cases, a corporation 
  1. You paid at least $600 to the individual during the tax year 

You must file Form 1099-NEC for anyone you had backup withholdings for, even if the amount was less than $600.   

Where do I get Form 1099-NEC?  

Download a copy here.  

When is Form 1099-NEC due?  

Employers are required to send Form 1099-NEC to the taxpayer and file a copy with the IRS by February 1. 

What do I do if I don’t receive Form 1099-NEC?  

If you haven’t received your form by February 1, contact the company you performed work for directly to request it. You will need the form to file your taxes by the filing deadline, so you should contact the company as soon as possible. 

Can I file Form 1099-NEC online?  

Yes, you can file Form 1099-NEC electronically with TaxSlayer. 

How did Form 1099-MISC change? 

The 1099-MISC was redesigned in 2020 to reflect the changes mentioned above. The biggest update to the form was made to Box 7, which was used for reporting non-employee compensation. Now Box 7 reports direct sales of $5,000 or more.

The information in this article is up to date through tax year 2021 (taxes filed 2022).

This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.

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