In recent years, non-employee compensation was reported in Box 7 of the 1099-MISC form, that box now goes away. Instead, the 1099-NEC form Box 1 will be used to report non-employee compensation only. Other kinds of payments should be reported using the other 1099 forms (1099-MISC, 1099-INT, etc.).

The 1099-NEC does have a Box 2 on the form, which reads: “Payer made direct sales totaling $5,000 or more of consumer products to recipient for resale.” I have read several articles about the 1099-NEC and none discuss the use of Box 2, so refer to the IRS instructions for more detail. The other boxes on the 1099-NEC form are used to report any backup withholding, or state income tax withheld.

Finally, unlike the 1099-MISC, the 1099-NEC will not be included in the program where the IRS shares 1099 filing data with states.

• There is a new form for non-employee compensation, the 1099-NEC

• The 1099-MISC form has been redesigned – box numbers and locations have changed

• There are different due dates for the 1099-NEC and the 1099-MISC

• The 1099-NEC will not be shared by with IRS to States

• Non Employee Compensation for Independent Contractors of $600 or more
• Someone who is not an employee, who provided services
• Can go to an individual, parternship, estate, or corporation
• Should inlcude payments for services AND payments for parts or materials used to perform the services

Examples: Attorneys, Architects, Accountants, Graphic Designer, Web Developer, IT consultant, freelance writer, non-employee sales commissions, freelance contractors, benefits consultant and directors’ fees.

Filing Due Date: 1/31/2021

Royalties, Rents, Prizes and Awards, Other Income Payments, Medical and healthcare payments, etc.

Filing Due Date: 2/28/2021

See IRS Form 1099-MISC and Form 1099-NEC Instructions for more details.

If you use a 1099 filing service, such as Track1099, they are already ready and prepared for the new form. If you still file manually, you can now be prepared.