W2 Mate software

Questions and Answers About Form 1099-NEC

Get answers to frequently asked questions about processing the new 1099-NEC tax forms and how to stay in compliance with IRS regulations for reporting none-employee compensation.

What is a 1099-NEC tax form?

Form 1099 NEC is a new federal tax form that payers must file with the Internal Revenue Service to report payments paid to none-employees such as contractors, vendors, consultants and the self-employed. The formal name of the Form 1099-NEC is “Nonemployee Compensation.”

How does form 1099-NEC work?

Here’s what the form does:

  • Shows who the filer is: The first section of form 1099-NEC lists the payer’s (the entity reporting income to the IRS) information such as the name, address, phone number and tax identification number (such as SSN and EIN).
  • Shows who the recipient is: The second section of form 1099-NEC lists the recipient’s (the contactor or vendor) information such as the name, street address and social security number (employer identification number in the case of businesses).
  • Shows none-employee compensation: Box 1 on form 1099-NEC replaces the very popular box 7 on form 1099-MISC. Box 1 shows nonemployee compensation and/or nonqualified deferred compensation. If the recipient is in the trade or business of catching fish, box 1 may show cash received for the sale of fish.
  • Shows backup withholding: An organization must withhold income tax on certain payments if the contactor / vendor did not give their SSN / EIN to the payer. Box 4 on form 1099-NEC shows the amount of federal income tax withheld by the payer.
  • Shows state income tax withholding: As more and more states require filers to report non-employee income directly to them, boxes 5-7 on form 1099-NEC are more important than ever. Some states require paper filing while others require electronic filing through upload to the DOR website.

Where do you find the 1099-NEC forms?

If you are preparing your forms using our 1099 NEC software, you provide the payer, recipient and money information and the software will generate the different form copies. You should be able to electronically file your 1099-NEC forms with the IRS and print copies for recipients and your records. If you prefer to fill out the 1099-NEC returns yourself, you can order the official IRS forms, which include a scannable Copy A for filing with the government and all other applicable copies of the form, visit our buy page. If you want to get the forms directly from the IRS, you can do so by visiting www.IRS.gov/orderforms.

What are the rules for issuing form 1099-NEC?

According to the IRS, organizations must file form 1099-NEC for each person who is not classified as an employee to whom they have paid at least $600 for services performed. This also includes payments to a law firm or fish purchases.

When to send 1099-NEC to vendors / contractors?

For tax year 2020, organizations must send Copy B of form 1099-NEC to the recipient by February 1, 2021 and file Copy A of the form with the IRS by February 1, 2021.These dates apply for both paper and electronic filing.

What is the minimum amount for completing a 1099-NEC form?

The threshold for filing “Nonemployee Compensation” forms is $600. So, if the payment is less than this threshold then it does not need to be reported to the IRS.

What happened to box 7 on form 1099-MISC?

Prior to the 2020 tax year, when you filed your 1099-MISC tax return with the IRS, box 7 was a money field used to report “Nonemployee compensation”, but now if you look at the form you can see that box 7 is a check box for indicating if the payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale. In order to report compensation paid to none-employees you need to use box 1 on the new form 1099-NEC.

How can I print 1099-NEC forms?

Follow these steps inside W2 Mate to print 1099-NEC forms:

  • Enter your business information under the company screen.
  • Enter the name, address and tax ID foreach of your recipients. You can also import this information from a spreadsheet and other data sources.
  • Populate box 1 with the dollar amount of nonemployee compensation you are reporting. You only need to do this step if you are entering the data manually.
  • Generate the quality control report to review the information entered inside the software. Pay extra attention to “Recipient Tax ID Hash” which is an easy way to verify that you entered all the tax IDs correctly. Box 1 totals is also very important.
  • Now that you have double checked the info entered inside W2 Mate, you can print the different 1099-NEC copies. At the minimum you need to print the recipient copy and the IRS federal copy.

What does form 1099-NEC look like?

Copy A of Form 1099-NEC must be in red OCR dropout ink or an exact match. However, the four-digit form identifying number must be in nonreflective carbon-based black ink in OCR A font. See image below:

form 1099-NEC

What are the steps for filing 1099-NEC electronically?

IRS Publication 1220 defines the format for creating 1099-NEC E-File submissions for upload to the IRS. Below is a summary of the steps:

  1. Step 1: Enter or import your 1099-NEC data into W2 Mate software. Check and double check the recipients’ tax identification numbers and dollar amounts to be reported under box 1 (Nonemployee compensation). You can also use the 1099-NEC quality control report to verify the data entered into the software.
  2. Step 2: Use W2 Mate software to create the 1099-NEC submission according to publication 1220. The amount codes for the Payer (A) Record are “1” for Nonemployee Compensation and “4” for Federal Income Tax Withheld. Please remember that form 1099-NEC is not supported by the IRS combined federal/state filing program, so boxes 5-7 (state boxes) are not included when you file with the federal government.
  3. Step 3: Fix any issues reported by the W2 Mate e-File engine, such as missing zip codes.
  4. Step 4: Log into the IRS FIRE System (https://fire.irs.gov/) and upload the 1099-NEC submission created by W2 Mate.
  5. Step 5: Log again into the IRS fire system in one business day to check the status of your submission. If the file was accepted, there is nothing else you need to do. If the submission was rejected, you need to review the message from the FIRE system and create / upload a new submission.

How can I apply for an extension to file 1099-NEC forms?

Filers of form 1099-NEC may request an extension request on paper Form 8809 (Application for Extension of Time to File Information Returns). To file for an extension, one of the following criteria must be met:

  • The filer suffered a catastrophic event in a federally declared-disaster area that made the filer unable to resume operations or made necessary records unavailable.
  • Fire, casualty, or natural disaster affected the operation of the filer.
  • Death, serious illness, or unavoidable absence of the individual responsible for filing the information returns affected the operation of the filer.
  • The filer was in the first year of establishment.
  • The filer did not receive data on a payee statement such as Schedule K-1, Form 1042-S, or the statement of sick pay required under section 31.6051-3(a)(1) in time to prepare an accurate information return.

Where do I mail paper forms 1099-NEC when filing with the federal government?

If your principal business, office or agency, or legal residence in the case of an individual, is located in Use the following address
Alabama, Arizona, Arkansas, Delaware, Florida, Georgia, Kentucky, Maine, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Texas, Vermont, Virginia Internal Revenue Service Austin Submission Processing Center P.O. Box 149213 Austin, TX 78741
Alaska, Colorado, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Utah, Washington, Wisconsin, Wyoming Internal Revenue Service Center P.O. Box 219256 Kansas City, MO 64121-9256
California, Connecticut, District of Columbia, Louisiana, Maryland, Pennsylvania, Rhode Island, West Virginia Department of the Treasury Internal Revenue Service Center Ogden, UT 84201
Outside the United States Internal Revenue Service, Austin Submission Processing Center, P.O. Box 149213, Austin, TX 78741

Can I print 1099-NEC forms using QuickBooks?

Older versions of QuickBooks (2017, 2016, 2015 and before) will not support 1099-NEC filing. In this case you can use our W2 Mate software to import 1099 amounts from QuickBooks and then prepare your 1099-NEC forms. If you do not want to import your data, you can type inside W2 Mate and then print. Newer versions of QuickBooks (2018, 2019, 2020 and above), will support 1099-NEC. For these versions you can also use our W2 Mate, to import your data and then print, PDF and e-File. You can also e-File with the state if you are required to do that.

What is the difference between form 1099-MISC and 1099-NEC?

Please visit the 1099-NEC vs 1099-MISC page which compares the two forms side-by-side, including what amounts to report, deadline, mailing address and what software to use for printing / e-filing.

Which states require 1099-NEC filing?

The following states do not require 1099-NEC filing:

The following states do require 1099-NEC filing, however some of them do not need the forms sent unless state income tax is withheld (you will need to check directly with the state in that case):

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