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Thread: CHANGES TO 1099 Misc + 1099 NEC

  1. #1
    DCEmu Newbie kimbedly's Avatar
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    Default CHANGES TO 1099 Misc + 1099 NEC

    Copied from Accounting Today:
    Despite COVID-19, the Internal Revenue Service is continuing forward with moving 1099-MISC Box 7, “Non-Employee Compensation” to a new form, the 1099-NEC. This is effective starting this tax year, 2020, meaning that in January 2021, organizations will file this new form.
    The 1099-NEC is straightforward: Box 1 is for non-employee compensation and Box 4 is for federal withholding for that contract employee. To put it simply, income that the company used to report in 1099-MISC Box 7 will now be reported in 1099-NEC Box 1.
    State tax withheld, payer state ID number and state income is reported in Boxes 5, 6 and 7 on the 1099-NEC.
    ASC 842, IFRS 16, and GASB 87: The dramatic impact of the new lease accounting standards
    To comply companies and public entities will need to overhaul the information collected and how it is gathered and stored.
    And that's it: Those are the only boxes on the 1099-NEC.
    Who gets it
    According to the IRS, the people for whom an organization should use the new 1099-NEC are those with at least $600 in:
    Services performed by someone who is not an employee (including parts and materials) (Box 1);
    Cash payments for fish (or other aquatic life) that the company purchases from anyone engaged in the trade or business of catching fish (Box 1);
    Payments to an attorney (Box 1). The term "attorney" includes a law firm or other provider of legal services. Attorneys' fees of $600 or more paid in the course of the organization’s trade or business are reportable in Box 1 of Form 1099-NEC, under Section 6041A(a)(1); or,
    Each person from whom the company has withheld any federal income tax (report in Box 4) under the backup withholding rules, regardless of the amount of the payment.
    The new 1099-MISC
    All of the other income typically reported on a 1099-MISC will stay on that form, though Boxes 7 through 17 on the 1099-MISC have been shuffled. Box 1, “Rents,” and Box 3, “Other Income,” remain the same.
    More information on the MISC and NEC are on the IRS web site:
    Most accounting software likely does not yet support a "1099-NEC" flag for vendors, nor does it produce a 1099-NEC report. If a company has vendors that use 1099-MISC Boxes 1 or 3, they may want to consider inserting a “Display Name” flag such as "Vendor Name 1 - NEC" and "Vendor Name 2 - MISC," so that in January they can easily download the 1099-MISC CSV file and separate out the vendors who will go to the 1099-NEC.
    APIs that connect accounting software to 1099-NEC software may or may not be updated by January, so we suggest reaching out to the organization’s 1099 software tech support and ensuring that they have a plan for mapping vendors into the proper form.
    Other issues
    State requirements. Individual state filing requirements are as yet unknown. All of us in the 1099 world have our fingers crossed that the IRS will make the 1099-NEC part of the Combined Federal/State program. This decision is still in flux; and according to the IRS, will be made by late August. We anticipate new state 1099-NEC requirements arriving late in the year, making for a hectic January.
    Corrections for a prior-year 1099-MISC. So what if a company has to correct a Box 7 amount on a 2019 1099-MISC and the new 1099-MISC Box 7 no longer exists? The IRS says corrections to 1099-MISC box 7 for tax years 2019 and earlier will remain on the old 1099-MISC form.
    Due dates. The due date for 1099-NEC is Feb. 1, 2021, to both the IRS and to recipients. The new 1099-MISC due date is pushed back to March 31, 2021, for IRS e-filing, since it no longer contains Box 7. It is still due to recipients on Feb. 1, 2021.

  2. #2
    DCEmu Newbie Philramp's Avatar
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    My friend is engaged in accounting in the tax department of a large company. She explained to me that every W-2 has the same fields, regardless of what the employer is. There are fields that provide employer information, including the Employer Identification Number (EIN) (federal) and the employer's state identification number. The remaining fields are mainly focused on the details of the employee's income from the previous year. She also advised a website where you can easily calculate everything

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