Get ready for year-end

We are in the final months of 2020! It is time to start collecting any missing W-9 forms from vendors that were paid $600 or more this year for 1099 filings. Of course, there are always exceptions, so when in doubt, obtain a W-9.

NEW - Nonemployee Compensation Reporting Conditions

The IRS has recently released a draft of a new form, Form 1099-NEC, which will be used to report payments for Nonemployee Compensation paid in 2020. This new Form 1099-NEC will only be used for reporting Nonemployee Compensation, while the 1099-MISC will continue to be used for other types of payments traditionally reported on the Form 1099-MISC. 

File Form 1099-NEC, Nonemployee Compensation (NEC), for each person in the course of your business to whom you have paid the following during the year:

At least $600 in:

1.   Services performed by someone who is not your employee (including parts and materials) (box 1);

2.   Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 1); or

3.   Payments to an attorney (box 1). (See Payments to attorneys, later.)

You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.