01/29/2021
Remember the deadline is fast approaching to file 1099s. The due date to file Copy A of Form 1099-NEC with the IRS is January 31 of the following year. Since this falls on a Sunday, the deadline got pushed to February 1. You get one extra day! If you work with contractors or do contracting work as someone who’s self-employed, here’s everything you need to know.
What is a 1099?
A 1099 is a document used to report the amounts that you have paid contractors (not employees) who worked for you in the past year and earned more than $600.
In the past, the 1099-MISC was necessary for most situations. But for the tax year 2020, there is a different form, the 1099-NEC. This a new form just for reporting independent contractor income (officially known as “non-employee compensation”). This form is for non-employee compensation that used to go on the 1099-MISC.
Who Gets a 1099?
Any independent contractor or small business you paid $600 or more during 2020 will need a 1099. This form allows the IRS to reconcile the money you pay to a vendor with the income they claim on their return.
Tips and help
Owning a business does not mean that you have to do everything for your business. Outsourcing to a bookkeeper is one of the simplest ways to take something complicated off your plate. Keeping your bookkeeping records up to date and knowing which vendors and independent contractors are above the $600 threshold and how they were paid, and having those W-9s filled out before you pay a contractor, will help contribute to a stress-free 1099 season next year.
