1099-NEC -- What it is, who it is for and when it is due

The due date to file form 1099-NEC (Nonemployee Compensation) is January 31st, 2025.

What is Form 1099-NEC?

A business issues this form to independent contractors and self-employed individuals who performed services and received non-employee compensation of $600 or more in 2024.

The form is also submitted to the IRS to allow the taxing agency to reconcile the amount of income the taxpayer should be reporting.

Some important points regarding the 1099-NEC:

? The form is only meant for payments made in connection to conducting business; personal payments as well as payments to Corporations do not need to be reported.

? The 1099-NEC does not need to be issued for credit card payments or third-party network transactions, such as PayPal.

? Good practice is to collect information from contractors before a payment is issued by requesting the contractor to complete Form W-9 which includes legal name, address, and social security number.

This allows the payor to issue the 1099 with all information readily available.

Now is a great time to prepare the information for these forms for your accountant, as there is a short window of time to prepare and complete these forms.

Have a question about this or another tax-related matter? Feel free to reach out!

#shomercpa #tax