Welcome to this presentation on when to use Form 1099-MISC, Miscellaneous Information and Form 1099-NEC, Nonemployee Compensation. I’m Kathy. Before I begin, please know the information in this presentation isn’t official guidance.

The IRS created Form 1099-NEC which is used to report nonemployee compensation beginning with tax year 2020.

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) sped up the due date to file Form 1099 NEC from Feb. 28 to Jan. 31 and Treasury Regulations eliminated the automatic 30-day extension for forms that include nonemployee compensation After we created Form 1099-NEC, we changed some of the box numbers on Form 1099-MISC to report certain income.

Some of the changes to Form 1099-MISC include: We moved the check box for payer made direct sales of $5,000 or more to box 7.

Crop insurance proceeds are now reported in box 9. Gross proceeds paid to an attorney, which used to be reported in box 14, are now reported in box 10. Section 409A deferrals are reported in box 12.

Nonqualified deferred compensation income is reported in box 14.

Boxes 15, 16 and 17 report state taxes withheld, state identification number, and amount of income earned in the state.

You should file Form 1099-MISC for each person to whom you have paid during the year: At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.

Or at least $600 in: Rents. Prizes and awards. Other income payments. Medical and health care payments. Crop insurance proceeds.

Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.

Gross proceeds paid to an attorney. Any fishing boat proceeds. Section 409A deferrals.

Nonqualified deferred compensation. You must file Form 1099-MISC for each person from whom you withheld any federal income tax under the backup withholding rules regardless of the amount you paid them. Report this in box 4.

You may either file Form 1099-MISC or Form 1099-NEC to report sales totaling $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale.

Now let’s discuss the Form 1099-NEC.

Use the Form 1099-NEC to report nonemployee compensation, which used to be reported on Form 1099-MISC, in Box 7.

Complete and send a Form 1099-NEC to: any nonemployee or business to whom you paid at least $600 in fees, commissions, or other forms of compensation for services (including parts and materials) they performed for your business or for payments you made to an attorney.

Also, for anyone from whom you withheld federal income tax under the backup withholding rules regardless of the amount you paid. Report this in box 4. You should send a Form 1099-NEC or MISC to any Limited Liability Company (LLC)

which is a disregarded entity LLC or partnership LLC.

If you’re not sure if the business is an LLC, C corporation or S corporation review the Form W-9 you received from the vendor who performed the work. Forms 1099-MISC or NEC aren’t required for: payments you make to businesses that sell physical products or goods — rather than provide services.

Nor are they required for payments to a C corporation or an S Corporation unless the payment is for medical or health care payments or legal services. We made some more changes to Form 1099 MISC and NEC in 2021.

We changed the title for Form 1099-MISC from Miscellaneous Income to Miscellaneous Information.

We added box 2 to Form 1099-NEC for direct sales reporting. Payers may use either box 2 on Form 1099-NEC or box 7 on Form 1099-MISC to report any sales totaling $5,000 or more of consumer products for resale, on buy-sell, deposit-commission, or any other basis. Now, let’s talk about due dates.

The due dates for information returns, like Forms 1099-MISC and 1099-NEC help the IRS detect refund fraud by verifying income individuals report on their tax returns. Payors can help support that process, and avoid penalties, by filing the forms on time and without errors.

The IRS recommends e-file as the quickest, most accurate and convenient way to file these forms.

If you’re filing 250 or more information returns, you must e-file them.

The filing deadlines for Forms 1099-MISC and 1099-NEC are different: Beginning with tax year 2020, you must file Form 1099-NEC with the IRS and issued to the recipient by January 31st of the following year whether you file on paper or electronically. As the payor, you must send copies of Form 1099-NEC Copy A to the IRS and Copy B and Copy 2 to any nonemployee by January 31st.

The Form 1099-MISC deadline is February 28th if you file on paper and March 31st if you file electronically.

If the deadline falls on a weekend or holiday, then it’s moved to the next business day.

You can get an automatic 30-day extension to file by completing Form 8809.

You must file the form with the IRS by the due date of the return; the automatic 30-day extension doesn’t apply to Form 1099-NEC.

For more information on these forms, see the instructions for Forms 1099-MISC and 1099-NEC on IRS.gov.

Thank you for watching.