What's New In 2020?
In 2020, the IRS removed non-employee compensation from the 1099-MISC form and included it on a separate form 1099-NEC. The 1099-NEC form is not new, but it has not been used since the 1980's. If you have affiliates and vendors who earn over $600 or $10 respectively, you will need to file both 1099-MISC and a 1099-NEC forms starting in tax year 2020.
What Is A 1099-NEC?
The 1099-NEC form is used to report compensation to non-employees who earn $600 or more during the tax year. In WP1099, this is used to report affiliate payments. Unlike a 1099-MISC, which can report many different types of payments, a 1099-NEC is only used to report information related to non-employee compensation.
Who Needs To File A 1099-NEC?
If you have made any payments to non-employees (including your affiliates) that total $600 per non-employee or more during the course of the year, that was made in the course of your trade or business you must file a 1099-NEC.
All individuals, sole proprietors, and LLCs must be issued a 1099-NEC. Corporations generally do not need to be issued a 1099-NEC except for under certain special circumstances.
What Information Do I Need To File A 1099-NEC?
If using our WP1099 plugin, we will gather as much of the information as we can for you to file 1099-NEC forms for your marketplace vendors, or affiliates. We look at all payments made during the year using one of the many compatible affiliate or vendor plugins. If payments to any individual are over the minimum reporting threshold, we'll include them in the report that we generate.
If you have made payments to anyone during the year for services outside of your marketplace vendors or affiliates, our export file has a section for every type of payment that can be edited by you before submitting the 1099 forms to the IRS. You can make as many changes as needed so that all the necessary 1099 forms are filed at the end of the year.
What Is The Filing Deadline For 1099-NEC?
Generally, you must file Form 1099-NEC by January 31, unless that day falls on a holiday or weekend. For 2020 1099-NEC forms, the filing due date will be February 1, 2021 because January 31, 2021 falls on a Sunday.
What Information Do I Need To Collect?
WP1099 does not collect sensitive information like social security numbers, or employer identification numbers. You can collect this information from your vendors or affiliates by sending an IRS W9 form to each vendor. It is highly recommended that this information is stored in a safe place so that unauthorized individuals do not get access to it.