As the trend towards freelance work continues to grow, more and more people will have to file form 1099, specifically 1099-NEC.
Tax filing season will be here before you know it, and we wanted to share 6 common 1099 questions that businesses and individuals alike are asking.
What is the deadline for filing 1099s?
The deadline for filing 1099s with the IRS and for sending them to the independent contractor recipient is January 31 every year. However, for tax year 2020, the deadline is February 1, because January 31 falls on a Sunday.
What happens if there are errors on my 1099?
The most common errors associated with 1099 filing are: filing the wrong form type, reporting the wrong amount, reporting the wrong TIN or not including one at all, using the wrong year/version of the form, and not using the correct IRS form (you cannot download or copy). We’ve shared some tips here on how to fix your errors and file a correction.
What are the different types of 1099s and what are they used for?
There are 18 different 1099 forms: 1099-A, 1099-B, 1099-C, 1099-CAP, 1099-DIV, 1099-G, 1099-H, 1099-INT, 1099-K, 1099-LTC, 1099-MISC, 1099-NEC, 1099-OID, 1099-PATR, 1099-Q, 1099-R, 1099-SA, and 1099-SB.
1099-NEC and 1099-MISC are two of the most common 1099s. For more information on what the other 1099 forms are used for, check out our blog post on that topic.
What’s the difference between 1099-NEC and 1099-MISC?
The 1099-MISC is for reporting miscellaneous payments made to independent contractors for things like rent, fishing boat proceeds, royalties, substitute payments, medical/healthcare payments, crop insurance proceeds, gross proceeds paid to a lawyer, and any excess golden parachute payments. It was previously used to report non-employee compensation and wages.
Non-employee compensation reporting is now done on the renewed 1099-NEC form – this was reintroduced to separate non-employee expenses and prevent common reporting mistakes. You’ll use a 1099-NEC to report these types of payments: fees, prizes, commissions, and awards, other compensation for services.
Do I always need to fill out 1099 for independent contract work?
You must send out 1099 forms, specifically 1099-NEC and 1099-MISC, if the applicable payments you made to an independent contractor exceed $600 in the tax year you are reporting for.
Can I e-file my 1099s?
E-filing and delivering your 1099s is actually the preferred method of submission. The Taxpayer First Act prohibits businesses from submitting more than 100 paper forms, so e-filing is the safest bet to ensure your forms are submitted properly.
eFile360 is an approved IRS e-file for Business Provider for 1099 information returns. Sign up for a free account today.