Form 1099-NEC is used to report nonemployee compensation of $600 or more paid in the course of a trade or business. This includes payments to independent contractors, freelancers, consultants, and certain corporations.
🚫 Important Program Limitation
Form 1099-NEC cannot be created or issued to another taxpayer within our program.
Users may enter a 1099‑NEC they received but cannot generate a 1099‑NEC form to give to someone else.
Characteristics of Nonemployee Compensation:
To be reported in Box 1, payments must meet all of the following:
- Total $600 or more during the year
- Paid to someone not classified as an employee
- Made in the course of a trade or business, including nonprofits and government entities
- Paid to an individual, partnership, estate, or certain corporations (e.g., for attorney fees or fish purchases)
What’s Included in Box 1:
- Fees, commissions, and contract payments
- Prizes and awards for services performed
- Fish purchases for cash
- Oil and gas payments for a working interest
- Legal fees paid to attorneys
Self-Employment Tax Considerations:
- Most income reported in Box 1 is subject to self-employment tax.
- If the income is not subject to self-employment tax and doesn’t belong in Box 1, it may be reported in Box 3 of Form 1099-MISC instead.
- Self-employed individuals must report this income on Schedule C and calculate self-employment tax using Schedule SE.
New for 2025:
- Box 3 on Form 1099-NEC is now used to report excess golden parachute payments, previously reported on Form 1099-MISC.
- The $600 reporting threshold remains in place for 2025, but will increase to $2,000 in 2026 under the One Big Beautiful Bill Act.
State Income and Withholdings
Typically, your 1099-NEC will not include state income or withholding amounts in boxes 5-7. Only when you have state withholdings to report for box 5 does the state portion of the form matter. If you have no state withholdings, Payer's state ID number, or state income, ignore the option to add a state when reporting your Form 1099-NEC.
Can I File 1099-NEC for the Contractors I Used?
No, TaxSlayer does not support issuing 1099-NECs to your employees or to the contractors you paid. Please refer to this article to learn how to issue 1099-NECs with the IRS.
How to Report Form 1099-NEC in the Program
To enter your 1099-NEC:
- Go to the Federal section.
- Select Income, then choose 1099-NEC under “Select My Forms.”
- Enter the information exactly as shown on the form.