Starting tax year 2020, any business that pays at least $600 for services performed by a person who is not their employee is required to file the new Form 1099-NEC. Previously, nonemployee compensation was reported in Box 7 on Form 1099-MISC.
Same Quick Deadline for Reporting
Like Form 1099-MISC, Form 1099-NEC requires filing by January 31, 2021, which makes it urgent that materials are submitted to the accounting office no later than January 15, 2021. Our accountants will process these forms and submit them electronically before the deadline.
Penalties for Late Filing
As if the tight turnaround wasn’t enough of a burden, the IRS has also established penalties ranging from $50-$280 per return for late filing. A penalty of $560. per return can be assessed for intentional disregard of the filing requirement. The accounting office cannot be held responsible for these penalties.
What Information Should Be Gathered for Form 1099-NEC?
You should have each nonemployee provide a Form W-9 to capture their Name, Address, Social Security Number or Employer Identification Number, and also supply the amount paid in 2020.