Has your business obtained a signed Form W-9 for each vendor providing services to your business? If not, now is the time as Form 1099 Nonemployee Compensation (NEC) is due to the Internal Revenue Service and recipients on January 31, 2022.
Form 1099-NEC was a new form effective for tax year 2020. In prior years, nonemployee compensation was reported on Form 1099-MISC box 7. According to the Internal Revenue Service, Form 1099-NEC should be issued to the following if paid $600 or more:
· Someone who performed services who is not an employee
· Fish purchases for cash from anyone engaged in the trade or business of catching fish
· Payments to attorneys under Section 6041A(a)(1)
Form 1099-MISC could be required in addition to Form 1099-NEC if you paid rent, royalties, other income, or the other types of income in box 5 through 14 on Form 1099-MISC. Copy B of Form 1099-MISC is due to the recipient on January 31, 2022, and Copy A is due to the Internal Revenue Service on February 28, 2022, if filed by paper, or March 31, 2022, if filed electronically.
For tax year 2021, the penalties for filing Form 1099-NEC and 1099-MISC after the due date are $110 per form if over 31 days late, $270 per form if filed after August 1 or not at all, and $550 per form if your business intentional disregards the filing.
For more information on Form 1099-NEC, visit the IRS web site at https://www.irs.gov/instructions/i1099mec.
Please contact us if you have questions on Form W-9, Form 1099-NEC, or 1099-MISC.
Manager, Rachel Deaton, CPA