Forms 1099 due for 2020

The IRS created a new form for reporting payments made to independent contractors. It is no longer appropriate to include those payments on form 1099MISC, you must now file them on new form 1099NEC. (non employee compensation). The other catch to this is that the 1099NEC is not part of the combined state reporting program. Many of you may not have even realized that there was a combined program. That program was what allowed you to file with the IRS only, while still satisfying your state’s filing requirement. That is because the IRS agreed to share that information with the various states. The IRS is NOT doing that for this new form, and therefore you now have an additional filing requirement to send forms to the state as well. If you file electronically (I do this for all of my clients), you must get signed up with the state’s filing system so that you can submit the 1099NEC to the state. I am signed up to do this with California and Idaho. If you file on paper, you must send a state copy (or the states version of the 1099NEC) to the appropriate state as well as to the IRS. All other payments that used to be reported on 1099MISC will still be, such as rents or settlement payments to attorneys (though not just regular legal fees paid, those are 1099NEC). So in many cases you may well be preparing 1099NEC as well as 1099MISC.. If you need assistance filing these new forms please contact my office.