Lee B Posted July 9, 2020 Report Share Posted July 9, 2020 Copied from Accounting Today: Despite COVID-19, the Internal Revenue Service is continuing forward with moving 1099-MISC Box 7, “Non-Employee Compensation” to a new form, the 1099-NEC. This is effective starting this tax year, 2020, meaning that in January 2021, organizations will file this new form. The 1099-NEC is straightforward: Box 1 is for non-employee compensation and Box 4 is for federal withholding for that contract employee. To put it simply, income that the company used to report in 1099-MISC Box 7 will now be reported in 1099-NEC Box 1. State tax withheld, payer state ID number and state income is reported in Boxes 5, 6 and 7 on the 1099-NEC. ASC 842, IFRS 16, and GASB 87: The dramatic impact of the new lease accounting standards To comply companies and public entities will need to overhaul the information collected and how it is gathered and stored. SPONSOR CONTENT FROM And that's it: Those are the only boxes on the 1099-NEC. Who gets it According to the IRS, the people for whom an organization should use the new 1099-NEC are those with at least $600 in: Services performed by someone who is not an employee (including parts and materials) (Box 1); Cash payments for fish (or other aquatic life) that the company purchases from anyone engaged in the trade or business of catching fish (Box 1); Payments to an attorney (Box 1). The term "attorney" includes a law firm or other provider of legal services. Attorneys' fees of $600 or more paid in the course of the organization’s trade or business are reportable in Box 1 of Form 1099-NEC, under Section 6041A(a)(1); or, Each person from whom the company has withheld any federal income tax (report in Box 4) under the backup withholding rules, regardless of the amount of the payment. The new 1099-MISC All of the other income typically reported on a 1099-MISC will stay on that form, though Boxes 7 through 17 on the 1099-MISC have been shuffled. Box 1, “Rents,” and Box 3, “Other Income,” remain the same. More information on the MISC and NEC are on the IRS web site: www.irs.gov/instructions/i1099msc. Most accounting software likely does not yet support a "1099-NEC" flag for vendors, nor does it produce a 1099-NEC report. If a company has vendors that use 1099-MISC Boxes 1 or 3, they may want to consider inserting a “Display Name” flag such as "Vendor Name 1 - NEC" and "Vendor Name 2 - MISC," so that in January they can easily download the 1099-MISC CSV file and separate out the vendors who will go to the 1099-NEC. APIs that connect accounting software to 1099-NEC software may or may not be updated by January, so we suggest reaching out to the organization’s 1099 software tech support and ensuring that they have a plan for mapping vendors into the proper form. Other issues State requirements. Individual state filing requirements are as yet unknown. All of us in the 1099 world have our fingers crossed that the IRS will make the 1099-NEC part of the Combined Federal/State program. This decision is still in flux; and according to the IRS, will be made by late August. We anticipate new state 1099-NEC requirements arriving late in the year, making for a hectic January. Corrections for a prior-year 1099-MISC. So what if a company has to correct a Box 7 amount on a 2019 1099-MISC and the new 1099-MISC Box 7 no longer exists? The IRS says corrections to 1099-MISC box 7 for tax years 2019 and earlier will remain on the old 1099-MISC form. Due dates. The due date for 1099-NEC is Feb. 1, 2021, to both the IRS and to recipients. The new 1099-MISC due date is pushed back to March 31, 2021, for IRS e-filing, since it no longer contains Box 7. It is still due to recipients on Feb. 1, 2021. 5 Link to comment Share on other sites More sharing options...
Max W Posted July 9, 2020 Report Share Posted July 9, 2020 A hectic January for us! That's become the new normal. 2 Link to comment Share on other sites More sharing options...
Natalie Steadman Posted August 24, 2020 Report Share Posted August 24, 2020 Does anyone know how ATX will support the 1099-NEC? I normally purchase the Uniforms that are blank and I can use those for both 1099s and W2s through the ATX payroll software but with the new 1099-NEC forms I am getting conflicting information. I called ATX and they can't seem to tell me if the uniform format will be the same or not. They referred me to NOLO stating NOLO guarantees their forms are supported by ATX Tax Software. However, I called NOLO and they said they only have 1 type of blank form for the 1099-NEC and it is two 1099s per page and not the 4 uniform version. I am trying to buy the forms and envelopes to get ready for the January filing season but getting no support from ATX. Has anyone received guidance for this yet? Link to comment Share on other sites More sharing options...
Lee B Posted August 24, 2020 Author Report Share Posted August 24, 2020 1. The IRS publishes guidance specifying the authorized formats for the 1099NEC 2. Software providers submit form format designs to the IRS for review and approval. 3. Following IRS approval, then software providers can move ahead Last month the IRS released a draft of Form 1099 NEC which was 2 forms per page On August 18th, the IRS released a new draft of Form 1099 NEC which was 3 forms per page There is no way to know if and when a 4 up format will be released. The software provider form design teams work closely with the IRS on this stuff so they probably know what's going on, however these details usually aren't known by support staff. Link to comment Share on other sites More sharing options...
Randall Posted August 25, 2020 Report Share Posted August 25, 2020 I assume ATX (and other programs) will be on top of this. It would seem fairly easy compared to the 1040 changes we've had recently. Ha. 1 Link to comment Share on other sites More sharing options...
Recommended Posts