A 1099-NEC is an IRS tax form used to report nonemployee compensation. It is filed by businesses to report payments of $600 or more made to individuals who are not employees but have provided services in the course of the business, such as independent contractors, freelancers, or other self-employed workers
. Key points about Form 1099-NEC:
- It is specifically for reporting payments for services to nonemployees, separating this from other miscellaneous payments previously reported on Form 1099-MISC
- The form must be filed if the business paid $600 or more during the year to the nonemployee for services
- Recipients of the form include individuals, sole proprietors, partnerships, and sometimes corporations (e.g., law firms)
- The business sends Copy A of the form to the IRS, and Copy B to the recipient by January 31 of the following year
- The form includes payer and recipient information, the total amount paid, and any withheld taxes
In summary, Form 1099-NEC is the official document businesses use to report payments to independent contractors and other nonemployees for tax purposes
