Starting Tax Year 2020, the IRS announced they will be bringing back the form 1099-NEC for reporting non-employee compensation. This historic tax form, last used in 1982, has circumvented its way back into use because of due date discrepancies on the 1099-MISC, caused by the Protecting Americans from Tax Hikes (PATH) Act of 2015.
To be clear — the reintroduction of the 1099-NEC does not retire the 1099-MISC; all that it does is simply recategorize what was formerly Box 7 Nonemployee Compensation on 1099-MISC to its own separate form, 1099-NEC for 2020 payments and forward. Reporting for all other types of compensation will still be retained on the 1099-MISC (like royalties, rent, healthcare payments, etc).
IRS Info Form 1099-NEC
Employers are required to submit Form 1099-NEC to the payee and file with the IRS by January 31st (Feb 1st for 2021).
IRS Info Form 1099-MISC
Employers are required to submit Form 1099-MISC to the payee by January 31st (Feb 1st for 2021) and file with the IRS by February 28th (March 1st for 2021).
Fact Sheet: http://www.idmsinc.com/PDF/1099-NEC.pdf
Disclaimer: These materials are provided for informational purposes only and are not intended as legal or tax advice. Readers of the Innovative Blog should contact their legal or tax professionals to discuss how these matters relate to their individual circumstances.