What is the required information to complete Form 1099-NEC?

Form 1099-NEC has?Payer’s information?(Name, Address, and TIN),?Receiver’s information(Name, Address, and TIN) and the boxes to report?Box 1?(non-employee compensation),?Box 4?(Federal Tax withheld), and?Boxes 5-7?(State information). Use Box 1 to enter the Non-Employee Compensation for $600 or more. Use Box 4 to enter the backup withholding information.

When is it compulsory to E-File Form 1099-NEC?

If you plan to file?250 or more?Form 1099-NEC Online payments, the IRS requires you send them electronically and can penalize your business if you don’t. If you’re filing 250 or fewer, send by regular mail.

Why the change to Form 1099-NEC Filing?

Under the previous IRS system, independent contractors had to file their yearly expenses by Jan. 31. But here’s the catch: Enterprises didn’t have to report non-employment compensation until one month later.

So independent contractors could file their taxes before the IRS received the non-employee compensation amounts.?As a result, the contractors’ total compensations for the year appeared lower than they actually were. So they paid lower taxes and received more IRS tax refunds.

By fast-tracking the due date, the IRS can more quickly figure out the total annual income of these contractors and tax them accordingly. The #IRS recommends sending these forms in an e-file format. Read More