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How to Fill Out Form 1099-MISC: The Ultimate Step-by-step Guide

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The year 2020 has brought on a lot of new changes for business owners and individuals alike. One major change is a redesigned Form 1099-MISC, thanks to the comeback of Form 1099-NEC. Learn about the recent changes, how to fill out Form 1099-MISC, and where to send yours once it’s good to go.

Form 1099-MISC overview

Form 1099-MISC, Miscellaneous Information, is an information return businesses use to report payments and miscellaneous payments.

File Form 1099-MISC for each person you have given the following types of payments in the course of your business during the tax year:

Also file Form 1099-MISC for each person you withheld federal income tax from under the backup withholding rules (regardless of the payment amount).

As of tax year 2020, do not use Form 1099-MISC to report contractor payments. This is where Form 1099-NEC comes in. And as always, don’t use a 1099 for W-2 employees.

If you fill out Form 1099-MISC, you also need to complete and send a copy of Form 1096 to the IRS. Form 1096 is a summary form of all the Forms 1099 you file. Show the total amount of miscellaneous income you paid throughout the year on Form 1096.

Form 1099-MISC vs. Form 1099-NEC

In the past, businesses had to use Form 1099-MISC to report independent contractor payments in addition to the other types of miscellaneous income. However in 2020, the IRS brought back Form 1099-NEC, Nonemployee Compensation, to report nonemployee compensation. Business owners used to report nonemployee compensation on Form 1099-NEC until 1982.

So, what is Form 1099-NEC? Good question. Form 1099-NEC is solely used to report independent contractor payments. Starting in 2020, business owners must use Form 1099-NEC to report nonemployee compensation.

Nonemployee compensation typically includes the following payment types to independent contractors:

Unlike previous years, do not use Form 1099-MISC to report nonemployee compensation. Instead, use Form 1099-NEC for nonemployee compensation payments. According to the IRS, you must file Form 1099-NEC if you paid $600 or more in:

Form 1099-NEC is not a replacement for Form 1099-MISC. Form 1099-NEC only replaces the use of Form 1099-MISC for reporting independent contractor payments. You may need to file both Forms 1099-MISC and 1099-NEC.

Preparing to fill out Form 1099-MISC

Before you fill out Form 1099-MISC, you need to gather some information. You should have the following on hand to fill out the 1099-MISC form:

How to fill out Form 1099-MISC

If you have experience filling out Form 1099-MISC, you may notice a few things have changed on the 2020 version of the form. The biggest change you’ll notice is Box 7. This is due to the resurrection of Form 1099-NEC.

Worried about filling out the new version? No worries. Let’s take a look at how to fill out the newly-redesigned form, shall we? Here’s what each box means on the form:

To fill out Form 1099-MISC, follow the steps below:

  1. Input your information (aka payer’s information)
  2. Add in the recipient’s information
  3. Fill in the totals in the applicable boxes

For more information about filling out Form 1099-MISC, check out the IRS’s Form 1099-MISC Instructions.

Sending Form 1099-MISC

Once you know how to fill out a 1099, you need to know where to send it. You might have noticed that there are several copies for each Form 1099-MISC. Certain copies go to the 1099 recipient, the IRS, and the state tax department. Some copies are for your records.

Check out where you send each part of Form 1099:

* “So … what are my state filing requirements, exactly?” This is a common business owner question. That’s why we created a FREE guide on 1099-NEC and 1099-MISC state filing requirements, complete with deadlines and state government links [download here]. 

Form 1099-MISC deadline

With the new Form 1099-NEC being brought into the mix, Form 1099-MISC has a new deadline.

If you plan on using the paper form, File Form 1099-MISC by March 1, 2021. Form 1099-MISC has a due date of March 31, 2021 if you file electronically. Send Copy B of Form 1099-MISC to the recipient no later than February 1, 2021.

To steer clear of late-filing penalties, file Form 1099-MISC on time.

Looking for an easy way to track miscellaneous payments for Form 1099-MISC? Patriot’s accounting software lets you streamline the way you record payments, expenses, and income. Start your free trial today!

This article has been updated from its original publication date of December 22, 2016.

This is not intended as legal advice; for more information, please click here.

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