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1099 Filing Requirements

Businesses that pay independent contractors, royalties, or other non-employee workers must file 1099 forms with the IRS and issue copies to the contractor. These forms are due as early as January 31 (or the next business day) to both the IRS and recipient.

Beginning in 2020, non-employee compensation of $600 or more is reportable on form 1099-NEC. These payments had been reported in box 7 of the 1099-MISC in prior years. While form 1099-NEC presents an additional filing, the underlying rules concerning who should be issued a 1099 has not changed.

Include fees, commissions, prizes and awards for services performed as a non-employee, and other forms of compensation for services performed for your trade or business by an individual who is not your employee.

Businesses are generally not required to file 1099s for payments made to an entity taxed as a corporation, but this exemption from reporting payments made to corporations does not apply to payments for legal services.

What is non-employee compensation?  If the following four conditions are met, you must generally report a payment as non-employee compensation.

  1. You made the payment to someone who is not your employee;
  2. You made the payment for services in the course of your trade or business
    1. (including government agencies and nonprofit organizations);
  3. You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and
  4. You made payments to the payee of at least $600 during the year.

Additionally, businesses should be aware that payments for rent should be reported on form 1099-MISC box 1, and interest payments to individuals or non-corporate entities need to be reported on form 1099-INT.

Penalties can be as high as $560 per 1099 filed late, incorrect, or missed.

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