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1099 vs w2

1099-NEC Replacing Form 1099-MISC

December 4, 2020/in News, Tax Tips - Business/by Betty Kim

For 2020 filings, there is a new and different form to fill out. The IRS will require Form 1099-NEC, Nonemployee Compensation to report non-employee compensation—Not Form 1099-MISC which was used for 2019 reporting. The Form 1099-NEC must be filed with the IRS and mailed to the recipient on or before February 1, 2021, which is the same date for mailing Forms W-2 to employees. Please note also that Form 1099-MISC will be revised for 2020 (for use to report rents, prizes, other income payments, etc.) and the IRS has rearranged the box numbers.

Form 1099-NEC must be filed for each person in the course of your business to whom you have paid at least $600 to:

Services performed by someone who is not your employee (including parts and materials).
Payments to an attorney.

Cash payments for fish you purchase from anyone engaged in the trade or business of catching fish.
There are some exceptions to the 1099-NEC filing requirements, primarily to corporations that are treated as C or S corporations. To determine this, you must obtain a completed copy of Form W-9 from all contractors to determine if the Form 1099-NEC needs to be filed. This form contains all the pertinent information needed for the Form 1099-NEC.

We recommend that this month you check to make sure that you have W-9 forms for all of your independent contractors and any attorneys that you have paid fees to and request them right away if you do not.

Please be informed that the CA Franchise Tax Board will be requiring the information to be reported to them also as the IRS will not forward Form 1099-NEC to the states as part of its combined federal/state filing program. Also, independent contractors for federal purposes may not be treated the same for the states, especially in California under the AB 5 Rules. So different reporting may be required and should be considered for state filing purposes.

Please be aware that there may be penalties for late filings of Form 1099-NEC, starting at $50 per form for up to 30 days late.

We are available to assist in the filing of your 1099 Forms and advisory.

Tags: Business, individual
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https://encorepartnersllp.com/wp-content/uploads/2020/12/Independent.png 262 590 Betty Kim https://encorepartnersllp.com/wp-content/uploads/2021/02/Logo_hex2-1030x266.png Betty Kim2020-12-04 11:40:002021-03-08 15:13:391099-NEC Replacing Form 1099-MISC
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