Commencing with the 2020 reporting year, nonemployee compensation will be reported on the newly created Form 1099-NEC. Taxpayers must file their Forms 1099-NEC on or before Feb. 1, 2021, using either paper or electronic procedures. Taxpayers filing 250 or more Forms 1099-NEC must electronically file. The redesigned Form 1099-MISC must be filed March 1, 2021, if filed by paper, and March 31, 2021, if filed electronically.
Previously, nonemployee compensation was report in Box 7 of Form 1099-MISC. The Protecting Americans From Tax Hikes Act (PATH) Act had accelerated the due date to file Form 1099-MISC from February 28 to January 31 for certain information returns to combat identity theft and refund fraud. The January 31 due date applied to Forms 1099-MISC when the forms reported nonemployee compensation in Box 7, but left the February 28 due date if the form did not report nonemployee compensation. The different due dates for the same Form 1099-MISC created considerable confusion for many taxpayers, and consequently, many inadvertently late-filed Forms 1099-MISC reporting nonemployee compensation. By creating a separate Form 1099-NEC with its own file date, the IRS hopes to alleviate the confusion.
While taxpayers no longer report nonemployee compensation on Form 1099-MISC, this form will still be used to report rents, prizes and awards, other income payments, fishing boat proceeds, medical and health care payments, crop insurance proceeds, payments to an attorney, section 409A deferrals and nonqualified deferred compensation.