For the 2020 tax year, form 1099-NEC has a filing due date of February 1, since January 31 falls on a Sunday in 2021. This date is for paper and electronic filing.
2020 is filled with apprehension as businesses scramble to stay afloat amid the COVID-19 crisis The revived 1099-NEC form may not be a big concern right now, but as the deadline for filing gets closer, you will have questions about this “new” form in regards to the state, federal, and possibly combined filing.
How does the 1099-NEC Change State Filing?
The introduction of the 1099-NEC form in addition to the 1099-MISC will change how businesses report and file non-employee compensation. Though the changes seem minimal, navigating which forms to use and when may prove more nuanced than initially thought.
According to the American Payroll Association, in the coming months, “state tax authorities will most likely be revising regulations, forms, and instructions to adopt the new federal Form 1099-NEC or states may choose to retain their form 1099-MISC equivalent for reporting NEC.”
States will have to figure out how best to incorporate this new form just as businesses will.
It’s also good to keep in mind that the Taxpayer First Act prohibits many businesses from submitting more than 100 paper forms. The addition of the 1099-NEC requirements could mean your business must now submit forms electronically if you have not done so in the past.
Can You Combine Federal and State Filing for 1099-NEC?
Though many 1099 forms, including 1099-MISC returns, can be filed through the Combined Federal/State Filing (CF/SF) program using the FIRE System, the same is not yet true for the new 1099-NEC.
Since the 1099-NEC has not been used since the 1980s, states have been using the 1099-MISC for all NEC reporting. Because the 1099-NEC filing due date is January 31 in most states, businesses will need to create a procedure to separate the appropriate information and report on either the 1099-NEC or 1099-MISC, based on the IRS’s new instructions and criteria.
Please note: as 1099-NEC is being used again for the first time in the 2020 tax year, the ability to file this form using the CF/SF system is subject to change before the end of the year.
There is still a lot of uncertainty surrounding the logistics of filing 1099-NEC and 1099-MISC for the 2020 tax year, contact us with all your 1099-related questions or sign up for a free eFile360 account.