{"id":3046,"date":"2020-02-15T13:05:39","date_gmt":"2020-02-15T18:05:39","guid":{"rendered":"https:\/\/falconexpenses.com\/blog\/?p=3046"},"modified":"2022-02-15T13:58:11","modified_gmt":"2022-02-15T18:58:11","slug":"what-is-form-1099-nec-for-nonemployee-compensation","status":"publish","type":"post","link":"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/","title":{"rendered":"What is Form 1099-NEC for Nonemployee Compensation"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_74 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d8886ada94d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d8886ada94d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#What_you_need_to_know_about_the_new_way_starting_in_2020_to_file_nonemployee_compensation\" >What you need to know about the new way, starting in 2020, to file nonemployee compensation.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#Background_Information\" >Background Information<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#What_is_nonemployee_compensation\" >What is nonemployee compensation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#Examples_of_nonemployee_compensation\" >Examples of nonemployee compensation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#When_not_to_use_For_1099-NEC\" >When not to use For 1099-NEC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/falconexpenses.com\/blog\/what-is-form-1099-nec-for-nonemployee-compensation\/#About_Falcon_Expenses\" >About Falcon Expenses<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>\n<h2 class=\"wp-block-heading\" id=\"what-you-need-to-know-about-the-new-way-starting-in-2020-to-file-nonemployee-compensation\"><span class=\"ez-toc-section\" id=\"What_you_need_to_know_about_the_new_way_starting_in_2020_to_file_nonemployee_compensation\"><\/span>What you need to know about the new way, starting in 2020, to file nonemployee compensation.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Form 1099-NEC is a form dedicated specifically to nonemployee compensation. It was released by the IRS is mid 2019, the first year it will be used is for tax year 2020.<\/p>\n\n\n\n<figure class=\"wp-block-image alignwide size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"803\" src=\"https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2020\/02\/Form-1099-NEC-1024x803.jpg\" alt=\"Form 1099-NEC\" class=\"wp-image-3094\" srcset=\"https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2020\/02\/Form-1099-NEC-1024x803.jpg 1024w, https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2020\/02\/Form-1099-NEC-300x235.jpg 300w, https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2020\/02\/Form-1099-NEC-768x602.jpg 768w, https:\/\/falconexpenses.com\/blog\/wp-content\/uploads\/2020\/02\/Form-1099-NEC.jpg 1226w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"background-information\"><span class=\"ez-toc-section\" id=\"Background_Information\"><\/span>Background Information<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Form 1099-NEC essentially replaces box 7 (labeled nonemployee compensation) on form 1099-MISC. Subsequently, box 7 on form 1099-MISC for tax year 2020 has been removed. Actually, this new form was an old form that has not been in use since 1982. Because there were separate filling dates for box 7 on the 1099-MISC and the other types of compensation reported on form 1099-MISC, it made sense for the IRS to separate box 7 into its own form.  For links to download these forms, including their instructions, please scroll to the bottom of this post.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-nonemployee-compensation\"><span class=\"ez-toc-section\" id=\"What_is_nonemployee_compensation\"><\/span>What is nonemployee compensation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nonemployee compensation is any compensation earned by an individual that does work as an independent contractor or self employed. Essentially, nonemployee compensation is compensation earned from a company when the individual compensated is not on a the payroll. However, for purposes of reporting nonemployee compensation on Form 1099-NEC it is a bit more complicated than that. According to the IRS payment must be reported if all of four conditions are met.<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>The compensation is made to someone who is not an employee<\/li><li>The compensation is made for services in the course of trade or business<\/li><li>The compensation is made to an individual, partnership, estate, or, in some cases, a corporation<\/li><li>The compensation made to the payee is at least $600 or more for the year<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"examples-of-nonemployee-compensation\"><span class=\"ez-toc-section\" id=\"Examples_of_nonemployee_compensation\"><\/span>Examples of nonemployee compensation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Professional service fees, such as those paid to accountants, lawyers and architects<\/li><li>Payments to an independent contractor, consultant, freelancer, or other independent worker<\/li><li>Commissions paid to a nonemployee salesperson<\/li><li>Witness or expert witness fees<\/li><li>Payments for services (this includes parts and materials required to perform the services)<\/li><\/ul>\n\n\n\n<p>A form 1099-NEC must also be filed for anyone who has federal income tax withheld under the backup withholding rules, even if the amount is less than $600.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"when-not-to-use-for-1099-nec\"><span class=\"ez-toc-section\" id=\"When_not_to_use_For_1099-NEC\"><\/span>When not to use For 1099-NEC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Form 1099-NEC is not for use to report personal payments, it is only intended for compensation earned in the course of doing trade or business for a profit. Further, don&#8217;t use Form 1099-NEC to report employee compensation. Use Form W-2 to report employee compensation. <\/p>\n\n\n\n<p>Use Form 1099-MISC for payments of real estate rent. Also, don&#8217;t use Form 1099-NEC for payments to tax-exempt organizations. <\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p>Download the most recent (new for 2020 tax year) form 1099-NEC, <a rel=\"noreferrer noopener\" aria-label=\"here (opens in a new tab)\" href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1099nec.pdf\" target=\"_blank\">here<\/a><br><br>Instructions for form 1099-NEC are, <a rel=\"noreferrer noopener\" aria-label=\"here (opens in a new tab)\" href=\"https:\/\/www.irs.gov\/instructions\/i1099msc\" target=\"_blank\">here<\/a><br><br>Download the most recent form 1099-MISC, <a rel=\"noreferrer noopener\" aria-label=\"here (opens in a new tab)\" href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1099msc.pdf\" target=\"_blank\">here<\/a><br><br>Instructions for form 1099-MISC are, <a rel=\"noreferrer noopener\" aria-label=\"here (opens in a new tab)\" href=\"https:\/\/www.irs.gov\/instructions\/i1099msc\" target=\"_blank\">here<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"about-falcon-expenses\"><span class=\"ez-toc-section\" id=\"About_Falcon_Expenses\"><\/span>About Falcon Expenses<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Falcon Expenses is a top-rated expense and mileage tracker app for self-employed and small businesses to track expenses and tax deductions. <strong><em>Falcon customers record $6,600, on average, in annual tax deductions. Get started today. <\/em><\/strong>The longer you wait, the more tax deductions you miss.<\/p>\n\n\n\n<p>Automatically track mileage expenses and expenses, keep an odometer log, receipt vault and log billable hours. Quickly organize expenses by time period, project, or client. Easily create expense reports and mileage logs with your expense data for email to anyone in PDF or spreadsheet formats, all from your phone. Falcon&#8217;s expense report template is IRS compliant. Use for keeping track of tax deductions, reimbursements, taxes, record keeping, and more. Falcon Expenses is great for self-employed, freelancers, realtors, delivery drivers, couriers, business travelers, truckers, and more.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>What you need to know about the new way, starting in 2020, to file nonemployee compensation. 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