Beginning in tax year 2020, Form 1099-NEC is used to report payments in the amount of at least $600 to an individual in the course of your business for:
- Services performed by an individual that is not your employee
- Cash payment for fish
- Payments to an attorney
- Individuals whose federal income tax was withheld (under the backup withholding rules)
Previously these payments were reported on Form 1099-Misc in Box 7.
What other payments are included in Box 1?
Box 1 income also includes fees and commissions, prizes and awards (for services performed as a nonemployee), other compensation for services performed by an individual who is not your employee, and fish purchases for cash. Include oil/gas payments for a working interest (whether or not services are performed).
What if my income is not subject to self-employment tax?
Generally, amounts reportable in box 1 are subject to self-employment tax. If payments to individuals are not subject to this tax and are not reportable elsewhere on Form 1099-NEC, report the payments in box 3 of Form 1099-MISC. However, if the payments are for work performed, the income is most likely subject to self-employment tax.
How do I report a 1099-NEC?
Form 1099-NEC is reported in the program by visiting the:
- Federal Section
- Income
- 1099-NEC
For more information, please view the IRS instructions for Form 1099-NEC.