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The 1099-NEC form plays a crucial role in the reporting of nonemployee compensation for tax purposes. Designed specifically for independent contractors and freelancers, this form is essential for those who receive payments for services rendered but are not classified as employees. It includes important details such as the payer's and recipient's taxpayer identification numbers (TINs), the total amount of nonemployee compensation, and any federal or state taxes withheld. Understanding how to correctly fill out and file this form is vital for both payers and recipients, as errors can lead to penalties. The IRS provides specific guidelines on obtaining the official printed version of the form, which must be scannable. Copies B and other versions can be downloaded for distribution to recipients. Additionally, the form can be filed electronically through the IRS FIRE system, streamlining the process for many businesses. Compliance with these requirements is not just a matter of good practice; it is necessary to avoid potential fines and ensure accurate tax reporting.

Common mistakes

  1. Incorrect TIN Entry: One of the most common mistakes is entering the wrong Taxpayer Identification Number (TIN) for either the payer or the recipient. Always double-check these numbers to ensure accuracy.

  2. Using the Wrong Copy: Some individuals mistakenly use Copy A for filing instead of the correct copies. Copy A is not scannable if printed from the IRS website. Always use the official printed version for filing.

  3. Missing Recipient Information: Failing to provide complete information for the recipient, such as name, address, or TIN, can lead to delays and penalties. Ensure all fields are filled out accurately.

  4. Incorrect Amounts: Reporting incorrect amounts in the nonemployee compensation box can cause issues. Verify that the amounts reported match your records.

  5. Neglecting State Tax Information: Some people overlook state tax withholding information. If applicable, ensure that this information is reported correctly to avoid state penalties.

  6. Not Filing on Time: Delays in filing the 1099-NEC can lead to penalties. Mark your calendar and ensure timely submission to the IRS.

  7. Ignoring Electronic Filing Requirements: If you are required to file electronically but choose to file on paper, you may face penalties. Check the IRS guidelines to determine your filing method.

Example - 1099 Nec Form

Attention:

Copy A of this form is provided for informational purposes only. Copy A appears in red, similar to the official IRS form. The official printed version of Copy A of this IRS form is scannable, but the online version of it, printed from this website, is not. Do not print and file copy A downloaded from this website; a penalty may be imposed for filing with the IRS information return forms that can’t be scanned. See part O in the current General Instructions for Certain Information Returns, available at www.irs.gov/form1099, for more information about penalties.

Please note that Copy B and other copies of this form, which appear in black, may be downloaded and printed and used to satisfy the requirement to provide the information to the recipient.

To order official IRS information returns, which include a scannable Copy A for filing with the IRS and all other applicable copies of the form, visit www.IRS.gov/orderforms. Click on Employer and Information Returns, and we’ll mail you the forms you request and their instructions, as well as any publications you may order.

Information returns may also be filed electronically using the IRS Filing Information Returns Electronically (FIRE) system (visit www.IRS.gov/FIRE) or the IRS Affordable Care Act Information Returns (AIR) program (visit www.IRS.gov/AIR).

See IRS Publications 1141, 1167, and 1179 for more information about printing these tax forms.

7171

VOID

CORRECTED

 

 

 

 

 

 

PAYER’S name, street address, city or town, state or province, country, ZIP

 

 

 

 

OMB No. 1545-0116

 

 

or foreign postal code, and telephone no.

 

 

 

 

 

 

Form 1099-NEC

 

 

 

 

 

 

 

 

 

 

 

Nonemployee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Rev. January 2022)

 

Compensation

 

 

 

 

 

 

 

 

For calendar year

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PAYER’S TIN

RECIPIENT’S TIN

 

 

1

Nonemployee compensation

 

Copy A

 

 

 

 

$

 

 

 

 

 

 

 

For Internal Revenue

RECIPIENT’S name

 

 

 

2

Payer made direct sales totaling $5,000 or more of

 

Service Center

 

 

 

 

 

consumer products to recipient for resale

 

File with Form 1096.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

For Privacy Act and

 

 

 

 

 

 

 

 

 

 

 

 

Paperwork Reduction Act

Street address (including apt. no.)

 

 

 

 

 

 

 

 

 

 

 

Notice, see the current

 

 

 

 

4

Federal income tax withheld

 

General Instructions for

 

 

 

 

 

Certain Information

 

 

 

 

$

 

 

 

 

 

 

 

City or town, state or province, country, and ZIP or foreign postal code

 

 

 

 

 

 

 

 

Returns.

 

 

 

 

5

State tax withheld

6 State/Payer’s state no.

 

7 State income

 

 

 

$

 

 

 

 

 

 

 

$

Account number (see instructions)

 

2nd TIN not.

 

 

 

 

 

 

 

 

 

 

$

 

 

 

 

 

 

 

$

Form 1099-NEC (Rev. 1-2022)

Cat. No. 72590N

 

www.irs.gov/Form1099NEC

 

Department of the Treasury - Internal Revenue Service

Do Not Cut or Separate Forms on This Page — Do Not Cut or Separate Forms on This Page

 

VOID

CORRECTED

 

 

 

 

 

 

PAYER’S name, street address, city or town, state or province, country, ZIP

 

 

 

 

OMB No. 1545-0116

 

 

or foreign postal code, and telephone no.

 

 

 

 

 

Form 1099-NEC

 

 

 

 

 

 

 

 

 

 

Nonemployee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Rev. January 2022)

 

Compensation

 

 

 

 

 

 

 

For calendar year

 

 

 

 

 

 

 

 

 

20

 

 

 

 

PAYER’S TIN

RECIPIENT’S TIN

 

1

Nonemployee compensation

 

Copy 1

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For State Tax

RECIPIENT’S name

 

 

2

Payer made direct sales totaling $5,000 or more of

 

 

 

 

 

consumer products to recipient for resale

 

Department

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

Street address (including apt. no.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

Federal income tax withheld

 

 

City or town, state or province, country, and ZIP or foreign postal code

$

 

 

 

 

 

 

 

 

 

 

 

5

State tax withheld

6 State/Payer’s state no.

 

7 State income

 

 

 

$

 

 

 

 

 

 

 

$

Account number (see instructions)

 

 

 

 

 

 

 

 

 

 

 

$

 

 

 

 

 

 

 

$

Form 1099-NEC (Rev. 1-2022)

 

www.irs.gov/Form1099NEC

 

Department of the Treasury - Internal Revenue Service

CORRECTED (if checked)

PAYER’S name, street address, city or town, state or province, country, ZIP

 

 

 

OMB No. 1545-0116

 

 

or foreign postal code, and telephone no.

 

 

 

Form 1099-NEC

 

 

 

 

 

 

 

 

Nonemployee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Rev. January 2022)

 

Compensation

 

 

 

 

 

For calendar year

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PAYER’S TIN

RECIPIENT’S TIN

1 Nonemployee compensation

 

 

 

 

Copy B

 

 

$

 

 

 

 

 

 

For Recipient

RECIPIENT’S name

 

2 Payer made direct sales totaling $5,000 or more of

 

This is important tax

 

 

information and is being

 

 

consumer products to recipient for resale

 

 

 

 

furnished to the IRS. If you are

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

required to file a return, a

 

 

 

 

 

 

 

 

negligence penalty or other

Street address (including apt. no.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

sanction may be imposed on

 

 

4 Federal income tax withheld

 

you if this income is taxable

 

 

 

and the IRS determines that it

City or town, state or province, country, and ZIP or foreign postal code

$

 

 

 

 

 

 

 

 

 

 

 

 

has not been reported.

 

 

5 State tax withheld

6 State/Payer’s state no.

 

7 State income

 

 

$

 

 

 

 

 

 

$

Account number (see instructions)

 

 

 

 

 

 

 

$

 

 

 

 

 

 

$

Form 1099-NEC (Rev. 1-2022)

(keep for your records)

www.irs.gov/Form1099NEC

Department of the Treasury - Internal Revenue Service

Instructions for Recipient

You received this form instead of Form W-2 because the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

If you believe you are an employee and cannot get the payer to correct this form, report the amount shown in box 1 on the line for “Wages, salaries, tips, etc.” of Form 1040, 1040-SR, or 1040-NR. You must also complete Form 8919 and attach it to your return. For more information, see Pub. 1779, Independent Contractor or Employee.

If you are not an employee but the amount in box 1 is not self- employment (SE) income (for example, it is income from a sporadic activity or a hobby), report the amount shown in box 1 on the “Other income” line (on Schedule 1 (Form 1040)).

Recipient’s taxpayer identification number (TIN). For your protection, this form may show only the last four digits of your TIN (social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN)). However, the issuer has reported your complete TIN to the IRS.

Account number. May show an account or other unique number the payer assigned to distinguish your account.

Box 1. Shows nonemployee compensation. If the amount in this box is SE income, report it on Schedule C or F (Form 1040) if a sole proprietor, or on Form 1065 and Schedule K-1 (Form 1065) if a partnership, and the recipient/partner completes Schedule SE (Form 1040).

Note: If you are receiving payments on which no income, social security, and Medicare taxes are withheld, you should make estimated tax payments. See Form 1040-ES (or Form 1040-ES (NR)). Individuals must report these amounts as explained in these box 1 instructions. Corporations, fiduciaries, and partnerships must report these amounts on the appropriate line of their tax returns.

Box 2. If checked, consumer products totaling $5,000 or more were sold to you for resale, on a buy-sell, a deposit-commission, or other basis. Generally, report any income from your sale of these products on Schedule C (Form 1040).

Box 3. Reserved for future use.

Box 4. Shows backup withholding. A payer must backup withhold on certain payments if you did not give your TIN to the payer. See Form W-9, Request for Taxpayer Identification Number and Certification, for information on backup withholding. Include this amount on your income tax return as tax withheld.

Boxes 5–7. State income tax withheld reporting boxes.

Future developments. For the latest information about developments related to Form 1099-NEC and its instructions, such as legislation enacted after they were published, go to www.irs.gov/Form1099NEC.

Free File Program. Go to www.irs.gov/FreeFile to see if you qualify for no-cost online federal tax preparation, e-filing, and direct deposit or payment options.

 

VOID

CORRECTED

 

 

 

 

 

 

PAYER’S name, street address, city or town, state or province, country, ZIP

 

 

 

 

OMB No. 1545-0116

 

 

or foreign postal code, and telephone no.

 

 

 

 

 

Form 1099-NEC

 

 

 

 

 

 

 

 

 

 

Nonemployee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Rev. January 2022)

 

Compensation

 

 

 

 

 

 

 

For calendar year

 

 

 

 

 

 

 

 

 

20

 

 

 

 

PAYER’S TIN

RECIPIENT’S TIN

 

1

Nonemployee compensation

 

Copy 2

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To be filed with

RECIPIENT’S name

 

 

2

Payer made direct sales totaling $5,000 or more of

 

 

 

 

 

consumer products to recipient for resale

 

recipient’s state

 

 

 

 

 

 

 

 

 

 

 

income tax

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

return, when

Street address (including apt. no.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

required.

 

 

 

4

Federal income tax withheld

 

 

City or town, state or province, country, and ZIP or foreign postal code

$

 

 

 

 

 

 

 

 

 

 

 

5

State tax withheld

6 State/Payer’s state no.

 

7 State income

 

 

 

$

 

 

 

 

 

 

 

$

Account number (see instructions)

 

 

 

 

 

 

 

 

 

 

 

$

 

 

 

 

 

 

 

$

Form 1099-NEC (Rev. 1-2022)

 

www.irs.gov/Form1099NEC

 

Department of the Treasury - Internal Revenue Service

 

VOID

 

CORRECTED

 

 

 

 

 

 

PAYER’S name, street address, city or town, state or province, country, ZIP

 

 

 

OMB No. 1545-0116

 

 

or foreign postal code, and telephone no.

 

 

 

 

 

Form 1099-NEC

 

 

 

 

 

 

 

 

 

 

Nonemployee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Rev. January 2022)

 

Compensation

 

 

 

 

 

 

 

For calendar year

 

 

 

 

 

 

 

 

 

20

 

 

 

 

PAYER’S TIN

RECIPIENT’S TIN

 

 

1 Nonemployee compensation

 

Copy C

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Payer

RECIPIENT’S name

 

 

 

2 Payer made direct sales totaling $5,000 or more of

 

 

 

 

 

 

 

 

 

 

consumer products to recipient for resale

 

For Privacy Act and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

Paperwork Reduction

 

 

 

 

 

 

 

 

 

 

Act Notice, see the

 

 

 

 

 

 

 

 

 

 

 

Street address (including apt. no.)

 

 

 

 

 

 

 

 

 

 

current General

 

 

 

 

 

 

 

 

 

 

 

Instructions for Certain

 

 

 

 

4 Federal income tax withheld

 

 

 

 

 

 

Information Returns.

City or town, state or province, country, and ZIP or foreign postal code

$

 

 

 

 

 

 

 

 

 

 

 

5 State tax withheld

6 State/Payer’s state no.

 

7 State income

 

 

 

 

$

 

 

 

 

 

 

$

Account number (see instructions)

 

 

2nd TIN not.

 

 

 

 

 

 

 

 

$

 

 

 

 

 

 

$

Form 1099-NEC (Rev. 1-2022)

 

www.irs.gov/Form1099NEC

 

Department of the Treasury - Internal Revenue Service

Instructions for Payer

To complete Form 1099-NEC, use:

•The current General Instructions for Certain Information Returns, and

•The current Instructions for Forms 1099-MISC and 1099-NEC.

To order these instructions and additional forms, go to www.irs.gov/EmployerForms.

Caution: Because paper forms are scanned during processing, you cannot file certain Forms 1096, 1097, 1098, 1099, 3921, or 5498 that you print from the IRS website.

Filing and furnishing. For filing and furnishing instructions, including due dates, and to request filing or furnishing extensions, see the current General Instructions for Certain Information Returns.

Need help? If you have questions about reporting on Form 1099-NEC, call the information reporting customer service site toll free at 866-455-7438 or 304-263-8700 (not toll free). Persons with a hearing or speech disability with access to TTY/TDD equipment can call 304-579-4827 (not toll free).

More About 1099 Nec

What is the 1099-NEC form used for?

The 1099-NEC form is used to report nonemployee compensation. This includes payments made to independent contractors, freelancers, and other non-employees for services rendered. If you paid someone $600 or more in a year for their services, you are required to issue this form to them and report it to the IRS.

Who needs to file a 1099-NEC?

Businesses and individuals who pay non-employees $600 or more in a calendar year must file the 1099-NEC. This includes payments to independent contractors, freelancers, and certain vendors. It's important to keep accurate records of these payments to ensure compliance.

When is the 1099-NEC due?

The 1099-NEC must be filed with the IRS by January 31 of the year following the payment. If you are providing a copy to the recipient, it must also be sent by this date. Meeting this deadline is crucial to avoid penalties.

What happens if I file a 1099-NEC late?

If you file a 1099-NEC late, you may incur penalties. The amount of the penalty depends on how late the form is filed. It can range from $50 to $550 per form, depending on the length of the delay. Timely filing is essential to avoid these costs.

Can I file the 1099-NEC electronically?

Yes, you can file the 1099-NEC electronically using the IRS Filing Information Returns Electronically (FIRE) system. This option is convenient and helps ensure that your forms are processed efficiently. You can also use the IRS Affordable Care Act Information Returns (AIR) program for electronic submissions.

What if I don’t have the recipient’s taxpayer identification number (TIN)?

If you do not have the recipient's TIN, you should request it using Form W-9. If the recipient fails to provide their TIN, you may be required to backup withhold a percentage of the payment. This amount must be reported on the 1099-NEC as backup withholding.

What should I do if I made a mistake on a filed 1099-NEC?

If you discover an error on a filed 1099-NEC, you should file a corrected form. Check the “CORRECTED” box on the form and provide the correct information. It’s important to rectify mistakes promptly to avoid penalties and ensure accurate reporting.

Where can I obtain official 1099-NEC forms?

You can order official 1099-NEC forms from the IRS website. Visit www.IRS.gov/orderforms, and follow the instructions to request the forms. It is important to use the official forms for filing to avoid penalties.

What if I receive a 1099-NEC and believe I am an employee?

If you receive a 1099-NEC but believe you should be classified as an employee, contact the payer to discuss the issue. If they do not correct it, you may need to report the income on your tax return as wages and file Form 8919 to report your situation to the IRS.

Key takeaways

Filling out and using the 1099-NEC form can be straightforward if you follow these key points:

  • Understand the purpose: The 1099-NEC form is used to report nonemployee compensation, typically for independent contractors.
  • Obtain the correct form: Always use the official IRS version of the 1099-NEC for filing. Copy A should not be downloaded from the IRS website as it is not scannable.
  • Order official forms: To receive scannable copies, visit the IRS website and order the forms directly.
  • Provide necessary information: Ensure that both the payer’s and recipient’s taxpayer identification numbers (TINs) are accurately filled out.
  • Report accurately: Nonemployee compensation must be reported in Box 1 of the form. This amount is subject to income tax.
  • Understand backup withholding: If a TIN is not provided, backup withholding may apply, which should be reported in Box 4.
  • Keep records: Recipients should keep a copy of the 1099-NEC for their records, as it contains important tax information.
  • Know filing deadlines: The 1099-NEC must be filed with the IRS by January 31 of the year following the payment.
  • Consider electronic filing: The IRS offers electronic filing options through the FIRE system for those who prefer digital submission.
  • Seek guidance if needed: If there are uncertainties about filling out the form, consult the IRS instructions or a tax professional for assistance.

By keeping these points in mind, you can ensure that the 1099-NEC form is completed correctly and submitted on time, minimizing potential issues with the IRS.

Form Attributes

Fact Name Fact Details
Purpose The 1099-NEC form is used to report nonemployee compensation to the IRS.
Filing Requirement Businesses must file this form for any nonemployee who received $600 or more in compensation during the year.
Copies Copy A is for the IRS, while Copy B is for the recipient. Copies C and 1 are for the payer's records and state tax purposes, respectively.
Penalties Filing a non-scannable Copy A may result in penalties. Always use the official printed version for IRS submissions.
Electronic Filing The 1099-NEC can be filed electronically through the IRS FIRE system or AIR program.
State-Specific Forms Some states require their own versions of the 1099-NEC. Check local laws for specific requirements.
Backup Withholding If a recipient does not provide a TIN, backup withholding may apply, reported in Box 4.
Direct Sales Box 2 indicates if the payer made direct sales of $5,000 or more of consumer products to the recipient for resale.
IRS Resources For more information, refer to IRS Publications 1141, 1167, and 1179, or visit www.irs.gov/Form1099NEC.

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Dos and Don'ts

When filling out the 1099-NEC form, it is important to adhere to specific guidelines to ensure compliance and accuracy. Below is a list of recommended practices and common mistakes to avoid.

  • Do: Use the official IRS version of the form for filing, as it is scannable.
  • Do: Provide accurate taxpayer identification numbers (TINs) for both the payer and the recipient.
  • Do: Report any nonemployee compensation accurately in Box 1.
  • Do: File the form electronically if possible, using the IRS FIRE system.
  • Don't: Print and file Copy A downloaded from the IRS website, as it may not be scannable.
  • Don't: Leave any required fields blank; this may result in penalties.
  • Don't: Misclassify workers; ensure that the recipient is correctly identified as a nonemployee.
  • Don't: Forget to check the box for direct sales if applicable, especially if the total exceeds $5,000.