KLSM CPA Firm PLLC
|Posted on November 21, 2020 at 2:15 PM|
The truth about Form 1099-MISC and 1099-NEC: When to issue and what happens if you don't!
You may have heard the following myths:
- "I only have a couple 1099's so I don't have to file",
- "My vendors won't provide info so I can't file" or
- "If I don't issue a 1099, the IRS will just disallow the deduction if I don't file".
These are myths and simply are not true!
Here are the facts you need to know:
Do you need to file a form 1099-MISC and/or a 1099-NEC? Yes, you are required to file, even if you only have one 1099 to file. Please be aware that the rules have changed.
You must file a form 1099-MISC, Miscellaneous Income, when you have have paid for the following items during the year (in the normal course of business):
- $10 or more in royalties or broker payments in lieu of dividends or tax-exempt interest
- $600 or more for:
- Prizes and awards
- Other income payments
- Notional principal contract
- Fishing boat proceeds
- Medical and health care payments
- Crop insurance proceeds
- Certain payments to an attorney
- Section 409A deferrals
- Nonqualified deferred compensation
Beginning with the 2020 tax year, you must file Form 1099-NEC, Nonemployee Compensation (NEC), for any sole proprietorship/individual, single member LLC, or partnerships you paid at least $600 to perform services in the course of your trade or business, when that person is not your employee, excluding corporations.
In summary, Forms 1099-MISC and 1099-NEC are due on January 31st. Contact KLSM CPA Firm, PLLC if you need assistance with your filing or need information on how to file when a vendor refuses to provide information.