1099-NEC, NONEMPLOYEE COMPENSATION

form 1099-NEC NONEMPLOYEE COMPENSATION

Introducing New From

1099-NEC is used by payers to report payments of $600 or more made in the course of a trade or business to others for services. Prior to the creation of this form, these payments were reported in box 7 on Form 1099-MISC. Payers must provide a copy of 1099-NEC to the independent contractor by January 31 of the year following payment.

Characteristics of Nonemployee compensation (NEC)

  • The payments made during the year totaled $600 or more.
  • The payee was not an employee of the payer.
  • The payment was made in the course of a trade or business
  • The payment was made to an individual, a partnership, or an estate; or, payment was made to a corporation

Due to the creation of 1099-NEC, IRS revised the Form 1099-Misc and rearranged the box number for reporting certain income.

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.
  • Crop insurance proceeds are reported in box 9.
  • Gross proceeds to an attorney are 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, respectively.