The year 2020 has brought on a lot of new changes for business owners and individuals alike. One major change is a redesigned Form 1099-MISC, thanks to the comeback of Form 1099-NEC. Learn about the recent changes, how to fill out Form 1099-MISC, and where to send yours once it’s good to go.
Form 1099-MISC overview
Form 1099-MISC, Miscellaneous Information, is an information return businesses use to report payments and miscellaneous payments.
File Form 1099-MISC for each person you have given the following types of payments in the course of your business during the tax year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
- At least $600 in the following:
- Rents
- Prizes and awards
- Other income payments
- Cash from a notional principal contract to an individual, a partnership or an estate
- Any fishing boat proceeds
- Medical and health care payments
- Crop insurance proceeds
- Payments to an attorney
- Fish purchased for resale
- Section 409A deferrals
- Nonqualified deferred compensation
Also file Form 1099-MISC for each person you withheld federal income tax from under the backup withholding rules (regardless of the payment amount).
As of tax year 2020,do notuse Form 1099-MISC to report contractor payments. This is where Form 1099-NEC comes in. And as always, don’t use a 1099 for W-2 employees.
If you fill out Form 1099-MISC, you also need to complete and send a copy ofForm 1096to the IRS. Form 1096 is a summary form of all the Forms 1099 you file. Show the total amount of miscellaneous income you paid throughout the year on Form 1096.
Form 1099-MISC vs. Form 1099-NEC
In the past, businesses had to use Form 1099-MISC to reportindependent contractorpayments in addition to the other types of miscellaneous income. However in 2020, the IRS brought backForm 1099-NEC, Nonemployee Compensation, to report nonemployee compensation. Business owners used to report nonemployee compensation on Form 1099-NEC until 1982.
So,what is Form 1099-NEC? Good question. Form 1099-NEC is solely used to report independent contractor payments. Starting in 2020, business owners must use Form 1099-NEC to report nonemployee compensation.
Nonemployee compensationtypically includes the following payment types to independent contractors:
- Fees
- Commissions
- Prizes
- Awards
- Other forms of compensation for services
Unlike previous years, do not use Form 1099-MISC to report nonemployee compensation. Instead, use Form 1099-NEC for nonemployee compensation payments.According to the IRS, you must file Form 1099-NEC if you paid $600 or more in:
- Services performed by someone who is not your employeeOR
- Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fishOR
- Payments to an attorney
Form 1099-NEC is not a replacement for Form 1099-MISC.Form 1099-NEC only replaces the use of Form 1099-MISC for reporting independent contractor payments. You may need to file both Forms 1099-MISC and 1099-NEC.
Preparing to fill out Form 1099-MISC
Before you fill out Form 1099-MISC, you need to gather some information. You should have the following on hand to fill out the 1099-MISC form:
- Payer’s (that’s you!) name, address, and phone number
- Your TIN (Taxpayer Identification Number)
- Recipient’s TIN
- Recipient’s name and address
- Your account number, if applicable
- Amount you paid the recipient in the tax year
How to fill out Form 1099-MISC
If you have experience filling out Form 1099-MISC, you may notice a few things have changed on the 2020 version of the form. The biggest change you’ll notice is Box 7. This is due to the resurrection of Form 1099-NEC.
Worried about filling out the new version? No worries. Let’s take a look at how to fill out the newly-redesigned form, shall we? Here’s what each box means on the form:
- 1:Rents– Enter amounts of $600 or more for all types of rents (e.g., real estate, machine, pasture).
- 2:Royalties– Enter gross royalty payments (or similar amounts) of $10 or more.
- 3:Other income– Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.
- 4:Federal income tax withheld– Enter any backup withholding, if applicable.
- 5:Fishing boat proceeds– Enter the individual’s share of all proceeds from the sale of a catch or the FMV (fair market value) of a distribution in kind to each crew member of fishing boats with normally fewer than 10 crew members.
- 6:Medical and health care payments– Enter payments of $600 or more made to each physician or other supplier or provider of medical or health care services.
- 7:Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale– Enter “X” in this checkbox if the statement applies to you. Do not enter a dollar amount in Box 7.
- 8:Substitute payments in lieu of dividends or interest– Enter aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer’s securities.
- 9:Crop insurance proceeds– Enter crop insurance proceeds of $600 or more.
- 10:Gross proceeds paid to an attorney– Enter gross proceeds of $600 or more paid to an attorney in connection with legal services.
- 11:Fish purchased for resale –Enter fish purchases made with cash payments of $600 or more during the year.
- 12:Section 409A deferrals– You are not required to complete this box. For details, seeNotice 2008-115.
- 13:Excess golden parachute payments– Enter any excess golden parachute payments.
- 14:Nonqualified deferred compensation——输入所有递延收益(包括on amounts deferred) that are includible in income under section 409A because the nonqualified deferred compensation (NQDC) plan fails to satisfy the requirements of section 409A.
- 15 – 17:State information– These boxes may be used by payers who participate in the Combined Federal/State Filing Program and/or who are required to file paper copies of this form with a state tax department.
To fill out Form 1099-MISC, follow the steps below:
- Input your information (aka payer’s information)
- Add in the recipient’s information
- Fill in the totals in the applicable boxes
For more information about filling out Form 1099-MISC, check out theIRS’s Form 1099-MISC Instructions.
Sending Form 1099-MISC
Once you know how to fill out a 1099, you need to know where to send it. You might have noticed that there are several copies for each Form 1099-MISC. Certain copies go to the 1099 recipient, the IRS, and the state tax department. Some copies are for your records.
Check out where you send each part of Form 1099:
- Copy A: The IRS
- Copy 1: The state tax department (if applicable)*
- Copy B: The recipient
- Copy 2: The recipient
- Copy C: Keep in your records
* “So … what are my state filing requirements, exactly?” This is a common business owner question. That’s why we created a FREE guide on 1099-NEC and 1099-MISC state filing requirements, complete with deadlines and state government links [download here].
Form 1099-MISC deadline
With the new Form 1099-NEC being brought into the mix, Form 1099-MISC has a new deadline.
If you plan on using the paper form, File Form 1099-MISC by March 1, 2021. Form 1099-MISC has a due date of March 31, 2021 if you file electronically. Send Copy B of Form 1099-MISC to the recipient no later than February 1, 2021.
To steer clear of late-filing penalties, file Form 1099-MISC on time.
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本文从原来的聚氨酯已经更新blication date of December 22, 2016.
This is not intended as legal advice; for more information, pleaseclick here.