By Susan Crockett, Tax Senior Associate | Family, Executive & Entrepreneur Advisory Services Team
IRS Creates New Form 1099-NEC for 2020 Reporting
The IRS has created a new Form 1099-NEC, Nonemployee Compensation, to report nonemployee compensation. This new form is currently in DRAFT form and will become effective for 2020 reporting. All nonemployee compensation will be reported on this new form instead of reporting on Form 1099-Misc. The filing deadline for the Form 1099-NEC will be January 31, 2021, for both the recipient and IRS copies.
The IRS has modified Form 1099-Misc to remove nonemployee compensation. This modified form is currently also in DRAFT form and will become effective for 2020 reporting. The filing deadline for Form 1099-Misc will be February 28, 2021, if mailed to the IRS (March 31, 2021, if filed electronically) and January 31, 2021, to the recipients. Effective for 2020, there will no longer be two different filing deadlines for Form 1099-Misc to the IRS because nonemployee compensation will be reported separately on Form 1099-NEC.
In order to meet the new 2020 filing requirements, we recommend that you review your accounting system and make changes to separate Form 1099-NEC reporting from other 1099 reporting.
For 2019, Nonemployee compensation will still be reported on Form 1099-Misc in box 7 and there will be two filing deadlines:
- January 31, 2020
Mail Forms 1099 to contractors or other recipients
- January 31, 2020
Mail Forms 1099-Misc which report nonemployee compensation in box 7 to the Internal Revenue Service (IRS)
- February 28, 2020
Mail all other Forms 1099 to the Internal Revenue Service (IRS) (March 31 deadline for electronic filings)
Form 8809, Application for Extension of Time to File Information Returns, can be filed to request a 30-day extension to file Forms 1099. Extensions for Form 1099 reporting nonemployee compensation require an explanation and a signature and are only approved for specific hardship conditions. This form needs to be filed by the original due date of the returns in order to get the 30-day extension.
Please refer to the following IRS publications for additional information and guidance:
- 2019 General Instructions for Certain Information Returns
- 2019 Instructions for Form 1099-Misc
- 2020 General Instructions for Certain Information Returns (DRAFT)
- 2020 Instructions for Forms 1099-Misc and 1099-NEC (DRAFT)
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.