{"id":1904,"date":"2021-01-06T13:29:41","date_gmt":"2021-01-06T13:29:41","guid":{"rendered":"https:\/\/www.tax2efile.com\/blog\/?p=1904"},"modified":"2023-07-03T09:43:17","modified_gmt":"2023-07-03T09:43:17","slug":"irs-form-1099-misc-vs-form-1099-nec","status":"publish","type":"post","link":"https:\/\/www.tax2efile.com\/blog\/irs-form-1099-misc-vs-form-1099-nec\/","title":{"rendered":"1099-NEC and 1099-MISC: What&#8217;s New for 2021 (Form 1099-MISC vs. Form 1099-NEC)"},"content":{"rendered":"<p>January is a hectic month for most businesses as they have to file their tax reporting forms. Businesses used <a href=\"https:\/\/www.tax2efile.com\/efile-1099-form\">Form 1099<\/a> to file payments for non-contract laborers, rents, brokerage, and attorneys. Now the IRS recommends them to file separate forms to avoid confusion and tax hikes.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_76 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"#\" data-href=\"https:\/\/www.tax2efile.com\/blog\/irs-form-1099-misc-vs-form-1099-nec\/#The_IRS_Form_1099-MISC\" >The IRS Form 1099-MISC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"#\" data-href=\"https:\/\/www.tax2efile.com\/blog\/irs-form-1099-misc-vs-form-1099-nec\/#The_IRS_Form_1099-NEC\" >The IRS Form 1099-NEC<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"#\" data-href=\"https:\/\/www.tax2efile.com\/blog\/irs-form-1099-misc-vs-form-1099-nec\/#What_is_new_for_the_year_2021\" >What is new for the year 2021:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"#\" data-href=\"https:\/\/www.tax2efile.com\/blog\/irs-form-1099-misc-vs-form-1099-nec\/#Comparison_between_Form_1099-MISC_and_Form_1099-NEC\" >Comparison between Form 1099-MISC and Form 1099-NEC:<\/a><\/li><\/ul><\/nav><\/div>\r\n<h3><span class=\"ez-toc-section\" id=\"The_IRS_Form_1099-MISC\"><\/span>The IRS Form 1099-MISC<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As the name suggests, <a href=\"https:\/\/www.tax2efile.com\/efile-1099-form\/efile-form-1099-misc\">IRS Form 1099-MISC<\/a> is used to report miscellaneous income by a business that is payable in the course of its trade. Firms use this form to report the following payments they have made to every individual during the tax year.<\/p>\n<ul>\n<li>Payment of at least $10 in the form of royalties and broker payments.<\/li>\n<li>Payments of $600 or more as rents, prizes, awards, and other income payments<\/li>\n<li>Money paid towards fishing proceeds<\/li>\n<li>Payments made towards healthcare costs<\/li>\n<li>Payments to an attorney and crop insurance proceeds etc.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"The_IRS_Form_1099-NEC\"><\/span>The IRS Form 1099-NEC<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This <a href=\"https:\/\/www.tax2efile.com\/efile-1099-form\/efile-form-1099-nec\">1099-NEC form<\/a> is for reporting the non-employee compensation by a business. It corresponds to payments made to the contractors who are not on the regular payroll of a business. The Form was in existence till 1982, before it was discontinued. The IRS is bringing back the Form 1099- NEC to protect people from tax hikes. Non-employee compensation covers the following types of payments made to independent contractors.<\/p>\n<ul>\n<li>Fees paid for both labor and material<\/li>\n<li>Prizes and awards<\/li>\n<li>Commissions<\/li>\n<li>Other compensation made towards services<\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"What_is_new_for_the_year_2021\"><\/span>What is new for the year 2021:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Businesses should not use the MISC Form to report payments made for independent contractors, and instead replace it with the Form 1099-NEC. Before the year 2020, Box 7 of Form 1099-MISC will be used to report non-employee compensation. This box will now be used to report direct sales made for $5000 or above.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Comparison_between_Form_1099-MISC_and_Form_1099-NEC\"><\/span>Comparison between Form 1099-MISC and Form 1099-NEC:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<tbody>\n<tr>\n<td width=\"150\"><strong>Basis <\/strong><\/td>\n<td width=\"222\"><strong>Form 1099 &#8211; MISC<\/strong><\/td>\n<td width=\"252\"><strong>Form 1099- NEC<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Uses<\/td>\n<td width=\"222\">This form is for reporting only miscellaneous income such as rents and payments for attorneys.<\/td>\n<td width=\"252\">This Form is to report non-employee compensations<\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Items reported<\/td>\n<td width=\"222\">Includes payments made towards royalties and broker payments, rents, and payments made for prizes and awards.<\/td>\n<td width=\"252\">Includes payment made for independent contractors and self-employed individuals and is reported in box 7 of the 1099-MISC form.<\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Where to get the form<\/td>\n<td width=\"222\">The form should be filed with the Internal Revenue Service<\/td>\n<td width=\"252\">This form cannot be downloaded online. It has to be either ordered at the IRS website or filed online.<\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Due dates<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/td>\n<td width=\"222\">The due date for filing Form 1099- MISC is March 1, by paper, and March 31 through electronic mode.<\/td>\n<td width=\"252\">The due date for filing the Form 1099- NEC is January 31st<\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Filing procedure<\/td>\n<td width=\"222\">Only one copy of the form needs to be filed with the IRS website.<\/td>\n<td width=\"252\">There should be two copies of the Form, where Copy A will be sent to IRS and Copy B to the contractor<\/td>\n<\/tr>\n<tr>\n<td width=\"150\">Reporting threshold<\/td>\n<td width=\"222\">Reports payments that are $600 and above but for broker payments and royalties, the minimum payout should be $10 and above<\/td>\n<td width=\"252\">Reports payments that are $600 and above<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Businesses should also check their state filing requirements of the two <a href=\"https:\/\/www.tax2efile.com\/efile-1099-form\">1099 Forms<\/a> as it differs between states. And they should make sure to file on time, to prevent late penalties that range from $50 to $100.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>January is a hectic month for most businesses as they have to file their tax reporting forms. Businesses used Form 1099 to file payments for non-contract laborers, rents, brokerage, and attorneys. Now the IRS recommends them to file separate forms to avoid confusion and tax hikes. The IRS Form 1099-MISC As the name suggests, IRS [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1904","post","type-post","status-publish","format-standard","hentry","category-form-1099"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/posts\/1904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/comments?post=1904"}],"version-history":[{"count":0,"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/posts\/1904\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/media?parent=1904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/categories?post=1904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tax2efile.com\/blog\/wp-json\/wp\/v2\/tags?post=1904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}