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1099-NEC vs 1099-MISC, which one should I use?

Jan 4, 2021

What’s the difference between the new 1099-NEC form and 1099-MISC, and which one should I use?

We hear this question a lot since the IRS rolled out the 1099-NEC form this year. What’s the difference between the new 1099-NEC form and 1099-MISC, and which one should I use? 

1099 form changes for 2021

The short answer is: the new 1099-NEC form replaces Box 7 on the old 1099-MISC – the box for reporting non-employee compensation. If you paid any non-employee more than $600 for services over the course of 2020, or if you withheld any income tax for a non-employee (regardless of the total amount of compensation) you will need to file form 1099-NEC.  

Why the IRS made this change

Prior to this year, you reported non-employee compensation in Box 7 on form 1099-MISC. This caused a lot of headaches, because the deadline for reporting non-employee compensation is January 31, but the deadline for the rest of the reporting done on form 1099-MISC is later – February 28 for paper filing, March 31 if filing electronically. By having both types of reporting on the same form, filers risked late penalties being applied to an entire batch of forms if filed after January 31, even if only some of the forms had an amount in Box 7 - i.e., only some of the forms were actually late. 

1099-NEC and 1099-MISC filing deadlines for 2021

Now, all non-employee compensation must be reported on form 1099-NEC by January 31 (February 1 this year because January 31 falls on a Sunday), and all other types of income typically reported on the 1099-MISC must be filed by February 28 (March 1 this year) if filing on paper, or March 31 if filing electronically.  

Where to get 1099 forms

We carry all types of tax forms in our warehouse, ready for same-day/next day shipping (or delivery in the Boise metro area). Call us at 208.342.3676 for help getting exactly what you need. 

Jamie McCormick

by Jamie McCormick

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