Since we’re now on a new year, this post will talk about a form that comes up at the start of every year. Yes, it’s those pesky Form 1099s. This is very important for you if you are a business owner, a self-employed person, or a freelancer. Also, this is essential if you have paid someone to do something for your business, whether it’s a virtual assistant or a web designer, to name a few. If you’ve paid a contractor in the past year for your business, this post is definitely for you.
Inside the video
In the video above, I discussed in detail what a Form 1099-NEC is, who needs to file it, and how to file 1099s. Here’s an outline for your reference:
- What’s a 1099-NEC?
- Who Should NOT Get a Form 1099-NEC?
- Exceptions to Filing Form 1099-NEC
- Filing a Form 1099-NEC (Step #1) – Gather necessary information (Form W-9)
- Filing a Form 1099-NEC (Step #2) – Submit Copy A to the IRS
- Submit electronically or via mail
- Due January 31, 2021
- If filing by mail, you must obtain a physical form (this can be challenging)
- Must include Form 1096 if you file a physical copy with the IRS
- Must file electronically if submitting 250 or more forms (penalty of up to $100 per form if you are required to file electronically and file by paper instead)
- Filing Form 1099-NEC (Step #3) – Submit Copy B to the Independent Contractor
- Must be sent by January 31, 2021
- You can use the version on the IRS website
- Can email but need their consent first (very stringent rules)
- Filing Form 1099-NEC (Step #4) – Check if you have state filing requirements
- There is a Combined Federal State Filing Program but the 1099-NEC is not yet part of it
- You may have filing requirements in the state where you do business, the state where your contractor resides and the state where the services were performed
- Look up each state’s requirements here: https://www.tax1099.com/1099-state-filing-requirements
- Filing Form 1099-NEC (The Easier Way!) – Use a service that prepares & files for you:
- Gusto or your payroll provider
- QuickBooks or your accounting provider