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New Form 1099-NEC for Reporting Nonemployee Compensation

January 4, 2021 | Tax Planning

Beginning with tax year 2020, nonemployee compensation will no longer be reported in box 7 on Form 1099-MISC.  Instead, it will be reported on Form 1099-NEC. 

A payment is generally reportable nonemployee compensation if four conditions exist: 

  1. the payer made the payment to someone who is not the payer’s employee; 
  1. the payer made the payment for services in the course of the payer’s trade or business (including government agencies and nonprofit organizations); 
  1. the payer made the payment to an individual, partnership, estate, or in some cases a corporation; and 
  1. the payer made payments to the payee of at least $600 during the year. 

Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021.  

If you need help preparing he proper informational forms, please contact our tax department.