1099 NEC and Misc question

[NECPA in NEBRASKA]

I have always issued a 1099 Misc for a subcontrator for one of my clients. I expected that this year I would just issue a 1099 NEC. They have a new bookkeeper and this year the amounts to the same person are split on the checks into contract hire, rent, insurance, telephone, utilities and various other accounts. The rent is reimbursement of the rent that the sub is paying, as are the other expenses. I am unsure if everything but the contract hire would belong on the 1099 Misc or not. Maybe I'm just making it too complicated. The sub is adamant that the entire amount be reported on the 1099, I just don't know if they are aware that rent would go on a different form and not reduce the S/E tax. Thank you for any ideas. I just want to get it out the door. I know that reimbursements don't have to be reported if there is a reportable plan and provides the invoices. This is not the case, because I checked. The sub just shows the amounts on the invoice.

[Lion EA]

I did some reading of instructions/etc. this year, because I have a new IT guy who bought some items for my Schedule C business that I reimbursed, so provided more than just services. My understanding, and what I did for my own company, is that everything you pay to an unincorporated person/entity that provided services to your business goes on the new Form 1099-NEC. He'll deduct his expenses on his end, and that'll lower his SE tax.

If paying ONLY rent to a non-corporation, for instance, then use the old Form 1099-MISC.

By the way, more state DOLs (as opposed to the IRS or state DRS/whatever your state's revenue department) flag accountable plans as an EMPLOYEE benefit and conduct employee vs IC audits. Employee vs IC has been a big issue in the northeast.

I'm answering off the top of my head, because you want to get it out the door. But if you want to research, start with the instructions, the IRS Pub addressing Forms 1099, and your own research service. Or hold through the weekend in hopes of more experienced posters responding.

[NECPA in NEBRASKA]

25 minutes ago, Lion EA said:

I did some reading of instructions/etc. this year, because I have a new IT guy who bought some items for my Schedule C business that I reimbursed, so provided more than just services. My understanding, and what I did for my own company, is that everything you pay to an unincorporated person/entity that provided services to your business goes on the new Form 1099-NEC. He'll deduct his expenses on his end, and that'll lower his SE tax.

If paying ONLY rent to a non-corporation, for instance, then use the old Form 1099-MISC.

By the way, more state DOLs (as opposed to the IRS or state DRS/whatever your state's revenue department) flag accountable plans as an EMPLOYEE benefit and conduct employee vs IC audits. Employee vs IC has been a big issue in the northeast.

I'm answering off the top of my head, because you want to get it out the door. But if you want to research, start with the instructions, the IRS Pub addressing Forms 1099, and your own research service. Or hold through the weekend in hopes of more experienced posters responding.

Thanks! I did read quite a bit last night and was leaning towards everything on the NEC since my client was not actually paying rent on the lease, just repaying what was billed to them. This is the last year for this 1099, since they have moved everything in house to cut costs.

[Lee B]

1 hour ago, NECPA in NEBRASKA said:

Thanks! I did read quite a bit last night and was leaning towards everything on the NEC since my client was not actually paying rent on the lease, just repaying what was billed to them. This is the last year for this 1099, since they have moved everything in house to cut costs.

I agree, everything belongs on the 1099 NEC. Someone needs to advise the bookkeeper not to split up everything like that, although the accounting software

that I currently use would total all of the payments no matter how many accounts were debited.