Please send in all 1099 information to our office no later than January 14, 2023, so we have enough time to process them before the deadline.
Who gets a 1099-NEC?
As in past years, you should report a payment as nonemployee compensation (on Form 1099-NEC) if:
- The payment was made to someone who is not your employee.
- The payment was made for services in the course of your trade or business.
- The payment was made to an individual, partnership, estate, or (sometimes) a corporation.
- The payments to the payee totaled at least $600 during the year.
Who gets a 1099-MISC?
Although a lot of payments are for nonemployee compensation, there are still a few other special payments that need to be reported on Form 1099-MISC. These include:
- Box 1 for rents paid (at least $600) for real estate, office space or machine rentals, except if they’re paid to a real estate agent or property manager.
- Box 2 for royalties (at least $10) stemming from the use of intangible property such as patents, copyrights, trade names and trademarks.
- Box 10 for gross proceeds paid to an attorney (at least $600) in connection with legal services, such as a settlement payment. (Note – Payments to attorneys for legal services are considered nonemployee compensation payments.)
As a reminder, corporations generally don’t need 1099s issued to them, with the exception of attorneys. While the above payments are the more commonly used boxes on the 1099-MISC form, there may be others that also need to be reported, such as a 1099-INT for interest payments made. Let us know if you have any questions on the tax reporting for any kind of payment.
Collect those W-9s!!
We know how long our to-do lists can get as we prepare for the year-end – which is why it’s so important to collect W-9 forms from your payees throughout the year before any payment is made to them. If you haven’t implemented that best practice, make it a new year’s resolution to do so! Take a few minutes this month to review the W-9s you have on file, and make sure you have one for each of your payees that get paid over $600 during the year.
This year, Form 1099-NEC must be filed by January 31, 2023. Form 1099-MISC must be furnished to recipients by March 15, 2023 and e-filed by March 31, 2023. However, it doesn’t hurt to get all your 2021 payments together early in January and file both forms (if needed) by the end of the month.
Note – Last year, you may have had to comply with separate state filing requirements as the 1099-NEC was not eligible for combined federal and state e-filing. The IRS has added the 1099-NEC to the combined filing program this year, so check with your state to see their updated requirements and if they accept combined filing.