There are lots of different 1099s and we wanted to help you better understand them, so we’ve put together this guide of eFile360 resources to help you grow your understanding.
1099s: The Basics
First thing’s first – what is a 1099? It is, at its most basic form, a tax document that is used to report miscellaneous payments made to individuals who are not employed by your business. Any non-employee who receives more than $600 from you in any given tax year should receive a 1099 from you.
There are more than a dozen different types of 1099 forms, the most popular include 1099-MISC (and now 1099-NEC), 1099-INT, 1099-DIV, 1099-K, 1099-B, 1099-G, and 1099-R. For a full list of 1099s and what each one is used for, check out this blog post.
Typically, the deadline for filing 1099s with the IRS and also sending them to each independent contractor recipient is January 31. Here’s a quick resource on common 1099 questions.
The New Kid: 1099-NEC
In tax year 2020, the 1099-NEC was brought back to take the place of Box 7 on form 1099-MISC. The 1099-NEC did not replace the 1099-MISC, it was just reinstated to help streamline the process for filing non-employee compensation.
Some examples of non-employee compensation include professional service fees to accountants, attorneys, architects, contractors, engineers, and more; payments for services like parts or materials used to complete the services, director’s fees, and other payments made to freelancers and independent contractors. For more about who fills out the 1099-NEC, click here.
We also put together a great list of dos and don’ts as it pertains to the form 1099-NEC. You can read it here.
The IRS has a ton of great insights into frequently asked questions about 1099s, including:
- What’s the difference between a Form W-2 and a Form 1099-MISC or Form 1099-NEC?
- How do you determine if a worker is an employee or an independent contractor?
- I received a Form 1099-NEC instead of a Form W-2. I’m not self-employed and don’t have a business. How do I report this income?
- Must I file quarterly forms to report income as an independent contractor?
- I purchased stock from my employer under a § 423 employee stock purchase plan and received a Form 1099-B for selling it. How do I report this?
- I changed my name and my social security card shows my new name. I received my Form W-2 and Form 1099 in my former name. How can I get my name corrected?
For more insight into the world of 1099s and for answers to frequently asked questions, eFile360 put together this article for you.
eFile360: 1099s Are Our Specialty
Hiring independent contractors is more prevalent during times of economic uncertainty, like right now. And with the recent changes to the tax code and 1099 filing, in particular, you may want to reach out to the experts at eFile360 to ensure your forms are filed correctly and on time.
Do you have lots of 1099s to file? Sign up for a free eFile360 account.