What you need to know:

• 📎  eFile 1099-NEC with the IRS and provide a copy to the recipient by January 31 each year.
• 📎  Use 1099-NEC to report non-employee compensation of $600 or more paid during the tax year.
• 📎  This form replaces Box 7 on the Form 1099-MISC for reporting independent contractor payments.
• 📎  Obtain the contractor's tax information using Form W-9 before filing the 1099-NEC.
• 📎  Report the total amount paid to the contractor in Box 1 of the 1099-NEC.
• 📎  Include your business details as the payer, such as your name, address, and TIN.
• 📎  Accurately enter the recipient's name, address, and TIN as provided on their W-9.
• 📎  Retain copies of all 1099-NEC forms filed for at least three years from the filing due date.
• 📎  E-file is mandatory if you're submitting 10 or more forms, but consider e-filing for all submissions for efficiency and accuracy.

What Is A 1099-NEC

Form 1099-NEC is a crucial tax document to report non-employee compensation. This form is designed for businesses to report payments made to individuals not classified as employees. The Internal Revenue Service (IRS) has separated this reporting from the previously used Form 1099-MISC to streamline the process.

What Is 1099-NEC Used For

You should utilize Form 1099-NEC in the following scenarios:

• • You've paid non-employees for services related to your business.
• • The total payments to a single recipient amount to $600 or more within the tax year.
• • You've made payments to attorneys for legal services.
• • Payments were made to a corporation (in some instances).

It's important to note that this form is not used to report employee payments, which are typically reported on Form W-2.

How To eFile 1099 NEC

Form 1099-NEC is used to report nonemployee compensation, typically for independent contractors or freelancers. Here's a simple step-by-step guide to filing your 1099-NEC forms using Doculiner:

Step 1: Enter Payer Information

Fill in the details of your business as the payer. Here’s what you’ll need:

• 1. Payer’s Taxpayer Identification Number (TIN): EIN for businesses or SSN for individuals.
  2. Payer’s Legal Name and Trade Name (if applicable).
  3. Address, City, State, and ZIP code.

Once all the information is entered, click Save Payer to store these details for future filings.

Step 2: Enter Recipient Information

Provide the information about the individual or entity you're paying:

• 1. Recipient’s Taxpayer Identification Number (TIN): This can be an EIN, SSN, or ITIN.
  2. Recipient’s Legal Name and Trade Name (if applicable).
  3. Address, City, State, and ZIP code.
  4. Account Number: (Optional but useful if you have a unique account for the recipient.)

‍

Step 3: Input Nonemployee Compensation

Now, you’ll need to enter the payment details. Key fields to fill out include:

• Box 1: Nonemployee Compensation: This is where you report the total payments made to independent contractors or freelancers during the tax year. These payments must be $600 or more to require reporting.
  Box 2: If applicable, check this box if you made direct sales of $5,000 or more to the recipient for resale.
  Box 4: Federal Income Tax Withheld: If backup withholding applies, report the amount withheld here.

Step 4: Enter State Tax Information (if applicable)

If your state requires additional reporting, fill in the appropriate boxes:

• Box 5: State Tax Withheld.
  Box 6: State/Payer’s State Number.
  Box 7: State Income.

Check your state’s specific requirements to see if state-level filing is needed.

Step 5: Review and Validate

Carefully review all the information you’ve entered. Doculiner’s error-checking feature will help highlight any missing or incorrect fields to ensure everything is accurate.

Step 6: Submit the 1099-NEC Form

Once you’ve confirmed everything is correct, click the Submit to IRS button. Doculiner will securely send your forms to the IRS. You can also track the filing status directly within your account.

Step 7: Receive Confirmation

After submission, you’ll receive an email confirmation. You can also check the status of your submission from your Doculiner dashboard.

Tips for Accurate Completion

• 1. Double-check all entered information for accuracy.
• 2. Use the correct TIN for the payer and recipient (you can request the recipient's TIN using Form W-9).
• 3. Ensure the compensation amount in Box 1 is correct and includes all payments made during the tax year.
• 4. If applicable, accurately report any federal income tax withheld.
• 5. Verify that information is consistent across all copies of the form.

Remember, while electronic filing options are available, always consult a tax professional or the latest IRS guidelines to ensure compliance with current regulations.

While federal guidelines for 1099-NEC are consistent nationwide, state requirements can vary. Check your state's tax authority website or the FTA Members List by State for specific local regulations.