Understanding 1099 NEC for Independent Contractors

Key Points

• 1099 NEC Requirement:
  • If you've paid an independent contractor $600 or more during the taxable year, you're required to send them a 1099 NEC.
  • Deadline: Must be delivered by January 31 of the following year.
  • In 2020, the form changed from 1099 Miscellaneous to 1099 NEC.
• Self-Employed Individuals:
  • Must report any net income over $400 on their income taxes, regardless of receiving a 1099.
• Who should issue a 1099 NEC?:
  • Small businesses who paid independent contractors $600 or more.
  • Self-employed individuals hiring independent contractors.

Generating 1099 NEC Forms

• Using Payroll Management Software:
  • Example: Gusto
    • Automates generation, filing, and mailing of 1099 forms to contractors and the IRS.
• Using Online Services:
  • Example: Tax1099.com
    • Instantly generate forms, provide digital access, mail paper copies, and submit to IRS and state if required.

Important Notes

• It's important to contact a tax professional for detailed advice.
• The provided information is intended to help understand the basics and available tools.