When Is Form 1099 Due?

As a business owner, you may have employees. However, you might also hire independent contractors for additional help. The payments you make to these independent contractors are generally known as 'non-employee compensation' or 'NEC'.

Before 2020, if you made NEC payments, you provided a Form 1099-MISC to the contractor and the IRS to report the amount of the payments.  However, from 2020 onward, the IRS has introduced a new form solely for reporting non-employee compensation paid to independent contractors.  The new form is known (not surprisingly!) as Form 1099-NEC. You can find the new form here: Form 1099-NEC. 

Who needs to file Form 1099-NEC?

If you or your business meet the four following requirements, you will need to complete and file Form 1099-NEC for each recipient/payee:

• The payment was made to someone who is not your employee.
• The payment was made for services in the ordinary course of your trade or business (but note that nonprofit organizations are considered to be engaged in a trade or business).
• The payment of income was made to an individual, partnership, or estate (or a corporation that provided legal or medical services).
• The payments made to the recipient/payee aggregate at least $600 or more for the year.

What do I need to file the form?

Generally, you will need five pieces of information to complete Form 1099-NEC:

1.   Your business information (address, taxpayer ID number, etc.)

2.   The recipient’s information (legal name, taxpayer ID number, address)

3.   The total amount of NEC payments made to the recipient

4.   Federal and state income taxes you withheld (if any) on the payments made

5.   State information

We recommend that you request and obtain Form W-9 from any independent contractor to whom you made payments. This will include the recipient:

• Legal name or business name, if applicable
• Business entity classification (sole proprietor, C corporation, S corporation, partnership, etc.), if applicable
• Current address
• Taxpayer identification number (SSN, ITIN, or EIN)

When do I need to file 1099-NECs by? 

January 31, 2025 for both sending to recipients and filing with the IRS (unlike some other 1099 forms, both deadlines are the same for 1099-NEC).

Now what?

After you have gathered the necessary information, you will need to send the form to three different parties:

1.   The IRS

2.   The recipient/payee

3.   The state jurisdiction(s)

Depending on whether you file electronic or paper forms with the IRS, additional steps may be required.

What if I need help?

Need Help With Your 2024 1099s? Tax season doesn't have to be stressful. Complex bookkeeping and tax requirements shouldn't keep you from focusing on what matters - running your business. Decimal specializes in streamlining your financial processes, ensuring accurate books, and making tax compliance seamless.

Let's make your 2024 1099 filing simple and stress-free. Talk to Decimal today to discover how we can automate your contractor payments tracking and simplify your entire 1099 process.