IRS Form 1099-NEC vs
Form 1099-MISC
IRS Form 1099-NEC vs. Form 1099-MISC: Overview
Updated on October 10, 2024 - 11:20 AM by Admin, TaxBandits
Form 1099-NEC and Form 1099-MISC are essential IRS tax return statements that report various payments made to non-employees. Form 1099-NEC is generally used to report the compensation made to the non-employee during the year. While the Form 1099-MISC reports miscellaneous income such as rental income, awards, payments made to attorneys, etc., made during the year.
Understanding the distinction between these two forms is vital for businesses, as misclassification or improper reporting can lead to tax liabilities and potential penalties. Here, in this article, we will explain the difference between Form 1099-MISC and 1099-NEC and filing requirements.
Table of contents:
1. What is Form 1099-NEC?
Form 1099-NEC is an annual tax return statement used by businesses to report the $600 or more compensation paid to non-employees for the services they provided during the year. The non-employees include 1099 contractors, freelancers, or sole proprietors.
2. What is Form 1099-MISC?
Form 1099-MISC is an IRS tax return statement used to report certain miscellaneous incomes made during the year. This form is filed by businesses or individuals if they have made $600 or more for the following payments
- Rents.
- Awards and prizes
- Other income payments
- Medical and healthcare payments
- Crop insurance proceeds
- Any fishing boat proceeds
- Cash payments for fish (or other aquatic life) purchased from anyone
- Cash paid from a notional principal contract to an individual, partnership, or estate
- Payments to an attorney
However, there are some exceptions for the $600 threshold. If a business or individual receives
- At least $10 or more payment received from the royalties
- Reported direct sale of at least $5,000 of consumer products to a buyer for resale.
- Taxes withheld under the backup withholding rule regardless of the $600 threshold
3. What’s the difference between Form 1099-NEC and MISC?
Form 1099-MISC and Form 1099-NEC are both IRS 1099 tax forms used to report payments made to non-employees, but they serve different purposes and are used for distinct types of income. Here's a breakdown of the key differences between these two forms:
| Forms | 1099-NEC | 1099-MISC |
|---|---|---|
| Reporting Requirements | Used to report the compensation made to the non-employee for the services offered during the year. | Used to report miscellaneous income other than non-employee compensation. |
| Who needs to file | Businesses or individuals that paid non-employee compensation to the payee (independent contractor) during the year through check or cash | Businesses or individuals who paid rent, health care payments, awards, or other miscellaneous income other than non-employee compensation to the payee through check or cash |
| Payment needs to be reported |
|
|
| IRS Penalties for Late Filing | $60 to $310 per form, to the maximum of $3,783,000 ($1,261,000 for small businesses). | $60 to $310 per form, to the maximum of $3,783,000 ($1,261,000 for small businesses). |
4. When are the Deadlines to file 1099-NEC and MISC?
The deadlines for filing Form 1099-NEC and Form 1099-MISC differ, and it's important to be aware of these dates to ensure compliance with IRS regulations:
Form 1099-NEC
- Both the IRS and recipient copies of Form 1099-NEC have the same deadline, which is January 31. This deadline applies regardless of the method used for filing.
Form 1099-MISC
-
For the recipient copy of Form 1099-MISC:
- If no data is reported in Box 8 (substitute payments in lieu of dividends or interest) or Box 10 (gross proceeds paid to an attorney), the deadline is January 31.
- If any data is reported in Box 8 or Box 10, the deadline for the recipient copy is February 15.
-
For filing with the IRS:
- If you are filing a paper copy of Form 1099-MISC, the deadline is February 28.
- If you are E-filing 1099-MISC with the IRS, the deadline is March 31.
Note:
In case the deadline falls on any weekend or Federal holiday, the deadline moves to the next
business day.
5. How to E-file Form 1099 NEC and 1099 MISC?
E-file 1099-NEC and 1099-MISC with TaxBandits in just a few simple steps and get instant IRS notification, E-filing with TaxBandits comes with various advantages, including e-delivery or postal mailing of recipient copies and seamlessly import data from various accounting software and more. We also support both Federal and State filing, allowing you to file multiple returns using bulk upload options.
Follow the simple steps to e-file your returns with TaxBandits.
- Choose the required Form 1099
- Enter the information
- Review and transmit it to the IRS
Related Topics
