Wichita, Kansas Mar 31, 2022 (Issuewire.com) - The method for firms to correctly report payments to contractors for their 2020 taxes underwent significant adjustments in 2020. Instead of utilizing Form 1099-MISC, Miscellaneous Information, the IRS reintroduced Form 1099-NEC, Nonemployee Compensation, to record self-employment income from the 2020 tax year. With these five Form 1099-NEC preparation suggestions, you can make sure your tax reporting is right for 2022.
Form 1099-NEC is required for all non-corporate service providers
If you paid a contractor at least $600 for services in 2021, you must provide a 1099-NEC to them before January 31, 2022.
If the services were provided by a firm, you are not obliged to provide Form 1099-NEC. Keep in mind that owners must submit Form 1099 NEC for attorney's fees and payments to corporations for legal services. To report payments to an attorney on Form 1099-NEC, you must get the attorney's taxpayer identification number (TIN) by having them complete IRS Form W-9.
Don’t report Credit card payments
Do not submit Form 1099-NEC if you paid for contractor services using a credit card, debit card, or gift card. By mailing the contractor Form 1099-K, the bank or credit card company that issued the actual payment will take care of it for you.
Don’t get confused by W-2 Form
Despite the fact that both Form W-2 and Form 1099-NEC are considered information returns, they serve quite distinct purposes. The objective of Form 1099-NEC is to report payments made to a nonemployee through trade or company.
For additional tips & information visit Form1099Online an IRS-approved 1099 E-file provider. It has been trusted by millions of taxpayers in recent years.
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