Form 1099-NEC: Tips for Everyone

By  //  December 22, 2022

Form 1099-NEC: Guide to 1099-NEC Form for Non-Employees

When the IRS improved an old tax blank and represented Form 1099-NEC to the audience, many taxpayers got confused. Some of us were so used to the old 1099-MISC that the new option became a real challenge for us. Yet, if you spend some time on the document, you quickly understand that it is even more comfortable and understandable than its predecessor.

What Is a 1099-NEC Form?

You can start by asking “what is a 1099-NEC form?” and “why do I need it?” This tax document was created by the IRS for the reports on non-employee compensation. If you are an employer who has independent and self-employed contractors working on you, you need to use this form. You might have already been familiar with the ancestor of this document, the 1099-MISC form.

Both 1099-NEC and 1099-MISC have a long history together when one of the forms changed to another. In 1982, taxpayers used 1099-NEC. In 2020, the IRS changed the requirements and provided the 1099-MISC form as a separate one. The Revenue Service offered all taxpayers who worked with non-employees to report on any payments of $600 and above via 1099-NEC.

Nowadays, the 1099-NEC form is back. You don’t have to search for a specific box of the non-employee payments as it was with 1099-MISC. Instead, you have the document completely focused on this question.

Who Gets a 1099-NEC Form?

You might wonder whether you are the one who gets a 1099-NEC or not. If you have no idea, and the deadline of January 31 is getting close, it is better to find that out. You might be among those taxpayers who need to receive this form or those who need to send it. Here is a detailed list for you:

  • You need to fill in the blank if you work with non-employees or at least one non-employee, whether it is a real estate agent, independent contractor, or self-employed freelancer, and you pay them over $600 per year. In this case, you need to include this information, the exact payments, and the amount;
  • If you are an independent contractor, worked with an employee, and received $600 or more per year, you need to receive the form from the employee before the deadline. If you did not get it, contact either the employee or the IRS;
  • If you are a foreign independent contractor, you still have to ask for a 1099-NEC form from a US citizen. Yet, you have to take care of the proper ITIN in advance to avoid any issues;
  • The IRS expects to receive the form from the taxpayer who hires non-employees and pays them $600 and more during the year.

There is an exception for those who work with non-employees but don’t need to provide this document. You still have to send your tax report on time but don’t add the filled-out 1099-NEC template. Don’t send the form if you represent:

  • C corporation;
  • S corporation;
  • LLC that was created either as a C corporation or an S corporation.

How to Get a 1099-NEC Form

The form is available online. It is totally free of charge, and you can download it on your device. If you are wondering “where can I get a 1099 NEC form?” you have two options:

  • You may use the IRS website and search for the document there;
  • You can address services such as PDFLiner.

While the IRS website is the first source that contains the form, PDFLiner offers all the editing tools you need to fill out the form online without any headaches.

It offers you detailed instructions and a handy service that allows you to create an electronic signature right in the document. You don’t need to scan the form, print it out, or download it anywhere since you can easily enter the blank and type the information required by the IRS there. Later, you can send it to the officials.

1099-NEC vs 1099-MISC

Both forms were applied for the same purposes. The main difference is in the time when they were used. The IRS changed one form for another several times. Now, 1099-NEC is the one that is used for non-employees. Yet, 1099-MISC is still legal. It is used for miscellaneous income reports, including attorney payments or rent. Those who make payments to independent contractors can’t use MISC now.

Both forms have different due dates. You need to complete Form 1099-NEC until January 31 unless it falls on the weekend; then the date is slightly moved. The 1099-MISC form has to be reported electronically by March 31, and the paper version—by March 1.

How to Complete Form 1099-NEC

This form is not complicated to fill in once you learn all the information you have to provide. It is one page long with numerous copies you need to send to different parties. The page contains 7 different boxes without numbers on one side for the information on the payer and recipient, and seven boxes with numbers that contain information on taxes and income. To avoid problems with the IRS or returns from the service, you have to follow these Form 1099-NEC instructions:

  1. Describe details on the payer, including the name, address, ZIP, phone number, and even TIN. TIN is the taxpayer identification number, which can be either an Employer Identification Number or Social Security Number.
  2. Provide data on the recipient, including TIN, name, address, and the number of accounts.
  3. Include the numbers of non-employee compensation and taxes withheld. Calculate the federal taxes and state taxes separately.
  4. Write down information on the state income.

The form must be sent to the independent contractor and the IRS by January 31. You have to send it before this date. The information you provide to all the parties must be the same. If there is a mistake in numbers, you have to file the correction form and contact the IRS.

Bottom Line: Effortless Form 1099-NEC Completion

You will easily complete the form you need once you learn the basic rules. Pay attention to the strict deadline you have to follow and the number of copies you need to send. Don’t forget to notify your contractor in advance.