Effective for tax year 2020, the IRS will be re-introducing the 1099-NEC. The 1099-NEC will be used to report Non-Employee Compensation, which was formerly reported in Box 7 of Form 1099-MISC. The Non-Employee Compensation box is being removed completely from future 1099-MISC forms.

Non-Employee compensation is usually reported for the following payments:

  1. Payments made to someone who is not your employee and the payment is being made in the course of your trade or business.
  2. The payments were made to an individual, partnership, or estate and exceeded $600.00 or more for the year.

Some examples of common transactions that should be reported on the 1099-NEC include professional service fees paid to attorneys, fees paid by one professional to another, and commissions paid to nonemployee salespeople.

Filing Deadlines for these two forms are provided below:

  1. 1099-NEC must be provided to the recipient and to the IRS by Monday, February 1st, 2021.
  2. 1099-MISC must be provided to the recipient by Monday, February 1st, 2021 as well, but does not need to be filed with the IRS until March 1st, 2021 (paper filing) or March 31st, 2021 (electronic filing).

Please contact someone here at Kimble if you have questions regarding the preparation of these two forms.