#1099 forms

For business taxpayers that pay or receive nonemployee remuneration, the IRS has released a new form. Any payment to a payee of $600 or more must be reported on Form 1099-NEC, Nonemployee Compensation, beginning with the 2020 tax year.

 Why use a new form?

 Prior to 2020, Form 1099-MISC was submitted to record payments totaling at least $600 for services rendered by a person who isn't recognized as an employee in a calendar year. Nonemployee compensation (NEC) is the term for these payments, and the payment sum was disclosed in box 7.

To eliminate the confusion brought on by different filing dates for Form 1099-MISC that report NEC in box 7 and all other Form 1099-MISC for paper filers and electronic filers, Form 1099-NEC was reintroduced. The Form 1099-NEC, which was last used in the 1980s, will be brought back for usage in 2020 and later, the IRS stated in July 2019.

 Which companies will file?

 Form 1099-NEC will now be used by payers of nonemployee compensation to report those payments.

Payers typically need to submit Form 1099-NEC by January 31. The deadline for 2020 tax returns will be February 1, 2021, as January 31, 2021 falls on a Sunday. No automatic 30-day extension is granted for Form 1099-NEC submission. An extension to file, nevertheless, might be possible in some cases of hardship.

 Can a company obtain an extension?

 For all versions of Forms 1099, as well as for other forms, an extension request should be made using Form 8809. Form 8809's draught was recently made available by the IRS. There are no requests for automatic extensions for Form 1099-NEC, according to the instructions. The IRS will only give one 30-day extension, and only under specific circumstances.

 Requests must be made in writing. Reasons for obtaining an extension are listed at line 7. The following are the justifications for granting an extension to file a Form 1099-NEC and a Form W-2, Wage and Tax Statement:

The filer experienced a devastating occasion in a governmentally proclaimed war zone that made the filer unfit to continue tasks or made vital records inaccessible.

A filer's activity was impacted by the passing, difficult disease or undeniable shortfall of the individual liable for recording data returns.

The activity of the filer was impacted by fire, setback or catastrophic event.

The filer was "in the principal year of foundation."

The filer didn't get information on a payee explanation like Timetable K-1, Structure 1042-S, or the assertion of wiped-out pay expected under IRS guidelines so as to set up an exact data return.

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