Beyond the Numbers

1099 Reporting Requirements

New for 2020 is form 1099-NEC (non-employee compensation) and a redesigned form 1099-MISC.

Taxpayers who have an active trade or business are required to prepare Form(s) 1099 to report various types of payments made during the year.

The filing requirement does not include payments made to corporations unless it is a payment for legal services rendered. Payments made via credit card or debit card are not included in the total payment reported on the Form(s) 1099.

Before payments are made to a vendor, obtain a W-9 Form – Request for Taxpayer Identification Number. The W-9 provides the information needed to issue the Form(s) 1099.

1099-NEC (non-employee compensation)

  • Will be used by most taxpayers to report the most common type of payments requiring a Form 1099, payments for services rendered, where the total payments exceed $600. This includes payments made to attorneys for legal services provided.
  • Amounts reported on 1099-NEC will be deemed to be subject to self-employment tax for the recipient.
  • Forms must be provided to the recipient and filed with the IRS by Feb. 1.

1099-MISC

  • Will be used to report other types of payments made including:
    • Rents
    • Payments to Attorneys that are not for the attorney’s services, such as in a settlement agreement.
    • Other income that is not reportable on the 1099-NEC or the other boxes of the 1099-MISC. Includes prizes and awards.
  • Forms must be to the recipient and filed with the IRS by Feb 28

Our office will contact businesses regarding two questions that must be answered on the tax returns for every corporation, partnership, and sole proprietorship.

  1. Did you make payments that would require filing Form(s) 1099
  2. If so, did you or do you intend on filing the required Form(s) 1099

Please contact our office if you have questions or need assistance in preparing the required Form(s) 1099.