Well, the IRS has! Everything old is New Again. The 1099-NEC was last used in 1982, and the IRS revived it in 2020.
The IRS has taken Non-Employee Compensation out of the 1099-MISC and reintroduced the form 1099-NEC. The 1099-NEC is to be used only for reporting independent contractor payments of $600 or more in the course of trade or business. You are still required to use the 1099-MISC for such items as royalties, rent, and healthcare payments.
In addition to nonemployee compensation, there are some other payments reported in box 1 of Form 1099-NEC.
- Prizes and awards for services performed by nonemployees
- Cash payments for fish
- Payments by a federal executive agency for services
- Gross oil and gas payments for a working interest
- Taxable fringe benefits for nonemployees
To be clear, you will need to use both forms if you have made NEC contractor payments AND royalties, rent and/or healthcare payments during the year.
Sounds complicated? Let our experts handle it for you. Just ask your bookkeeper for help.