36 Years Later – New Non-Employee Compensation Reporting Form September 10, 2019

September 10, 2019Form 1099-NEC has been resurrected by the IRS after 36 years on the shelf. Non-employee compensation paid in 2020 will be reported on Form 1099-NEC instead of Form 1099-MISC.

New non-employee compensation reporting Form 1099-NEC

New Non-Employee Compensation Reporting Coming for 2020

The 2020 Form 1099-NEC is due to the contractor and the IRS by January 31, 2021.

As you can guess, this change will help the IRS better target misclassified workers. If you need a brief summary of the employee versus independent contractor rules to send to a client, see the IRS’s fact sheet here.

If you think that your client has a problem with misclassified workers and that the 1099-NEC may alert the IRS, remember that the IRS continues to give some relief for penalties if the business voluntarily reclassifies its workers. See the details of the Voluntary Classification Settlement Program (VCSP) here.

Non-employee compensation reporting Form 1099-NEC 2020

The change may help us. We’ve all seen rent “stuck” in the wrong box on the Form 1099-MISC where it was identified as non-employee compensation. Reporting non-employee compensation on a separate form may help the issuer report more accurately.

Sharon Kreider, CPA, has helped more than 15,000 California tax preparers annually get ready for tax season. She also presents regularly for the AICPA, the California Society of Enrolled Agents, CCH Audio, and Western CPE. You’ll benefit from the detailed, hands-on tax knowledge Sharon will share with you—knowledge she gained through her extremely busy, high-income tax practice in Silicon Valley. With her dynamic presentation style, Sharon will demystify complex individual and business tax legislation. She’s a national lecturer for business and professional groups and consistently receives outstanding evaluations. In 2014, she was awarded the prestigious AICPA 2014 Sidney Kess Award for Excellence in Continuing Education.

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