Tips for Filing Form 1099-MISC and the new 1099-NEC

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First priority is to get all of your Form W-9s in hand ASAP! You need a Form W-9 from your vendors to confirm their information and to determine whether or not you must file a Form 1099 for payments made to them. Request a Form 1099 from your landlord, attorney, and any vendor who is not your employee who performed services for your company. It is best practice to require this documentation before making payment to these vendors, but if you don’t have a Form W-9 on file yet for them, send your requests on out now so you have plenty of time to get those Form 1099s prepped before the January 31 due date! Read on for more info on Form 1099 filing in 2020…

Previously, Form 1099-MISC was filed for each non-employee (independent contractor) to whom you have paid at least $600 (cash or check/ACH) for services performed for your business. This year, those payments will be reported on the new Form 1099-NEC. When reporting non-employee compensation, the filing deadline is January 31. These payments are now reported in Box 1 of Form 1099-NEC. If you are filing less than 250 forms, you can file on paper. If you file 250 or more returns, you must file electronically. If you are early to the game, you can order your forms online. Paper forms can be found at most office supply stores (Staples, Office Depot, etc.). You may also choose to e-file. Many accounting softwares and/or payroll softwares offer an e-file option within the platform. Check with your software provider to see if this is available to you and make sure you file by their required date. Besides non-employee compensation, be sure to analyze these two additional common categories for reporting:

  • Business Rent Payments should still be reported in box 1 of Form 1099-MISC. For business rent payments, you do not have to report these payments on Form 1099-MISC if you paid them to a real estate agent or property manager.
  • Attorney Fees paid should now be reported in box 1 of Form 1099-NEC. NOTE/ Attorney fees DO still need to be reported even if they are a corporation.

If you paid the vendor by credit card or a third- party network (like PayPal for business), those payments do not need to be reported as the credit card company or third party are required to report them. A few other common exceptions that typically do NOT need to be reported are as follows:

  • Payments to a corporation (including an LLC treated as a C or S corporation). NOTE/ Attorney fees DO still need to be reported even if they are a corporation.
  • Payments for merchandise, telephone, freight, and storage.

If filed on paper, Form 1099 filings should be filed with one Form 1096 (as a sort of summary coversheet). For the full list of instructions, see the IRS Instructions for Form 1099-MISC and Form 1099-NEC

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

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