IRS Form 1099-NEC 2024

What is Form 1099-NEC? 

Form 1099-NEC, which stands for 1099-Nonemployee Compensation, is a tax form used in the U.S. to report payments made to nonemployees, such as independent contractors, freelancers, and vendors. Employers should provide all nonemployees who earned more than $600 a 1099-NEC.

The 1099-NEC is a relatively new tax filing, introduced in 2020. Before 2020, businesses used Form 1099-MISC to report non-employee compensation.

What is non-employee compensation? 

Very simply, nonemployee compensation refers to any payment made to individuals or entities that are not employees of a business. This typically means payments made to independent contractors, freelancers, or self-employed individuals. 

The payee can be an individual, like a freelance consultant, or an entity, like a contractor operating under a sole proprietorship LLC. 

Who needs to file the 1099-NEC?

Businesses that pay $600 or more to a non-employee within a tax year must file a 1099-NEC for each individual or entity.

What information do I need to file a 1099-NEC?

The 1099-NEC form requires information from both the payer (business) and the recipient (the nonemployee). Here’s what you need:

1. Payer’s information, including name, address, and taxpayer identification number (TIN).
2. Recipient’s information, including name, address, and TIN (for individuals, the TIN is usually the SSN).
3. The total amount of nonemployee compensation paid.
4. Any federal or state income tax withheld.

When is Form 1099-NEC due?

Businesses must submit their 1099-NECs to the IRS and send a copy to the recipient no later than January 31st in the year following the taxable period.

This means if you had a contractor help you design PowerPoint slides on December 28th, 2023, you would need to provide a 1099-NEC by January 31st, 2024. 

If January 31st falls on a weekend or holiday, businesses can send the 1099-NEC by the next business day. 

Failure to submit an accurate 1099-NEC by the deadline can result in penalties.

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