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December 15, 2020

IRS Revises 1099-NEC Form for Reporting Non-Employee Compensation

In previous years, non-employee compensation was reported using Box 7 of the 1099-MISC form; business owners will now use the 1099-NEC form Box 1. Payments excluding non-employee compensation should be reported on other 1099 forms such as 1099-MISC, 1099-INT, etc.

Use 1099-NEC form, Box 1 for payments of at least $600 for:

  • Services performed by workers who are not employees of your company
  • Attorneys and other legal service providers
  • Individuals who your company withheld any federal tax under backup withholding rules.

Form 1099-MISC has been redesigned for reporting certain income due to the new 1099-NEC form

1099-NECs filed both paper and electronically are due to the IRS by February 1, 2021.
1099-MISCs filed by paper are due by March 1, 2021.
1099-MISCs filed electronically are due by March 31, 2021.

For complete instructions on how to file the new 1099-MISC and 1099-NEC forms please visit 2021 Instructions for Forms 1099-MISC and 1099-NEC or the IRS website.