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Subcontractors; Form 1099-MISC

Do you pay subcontractors?  Have you always issued Form 1099-MISC with Box 7 – nonemployee compensation filled in?

 

For 2020, forms filed in 2021, that appears to be changing. The IRS has prepared a draft form of Form 1099-NEC.  This form will be due on January 31, 2020.  This form has been in existence before, in 1983 the form was consolidated with the 1099-MISC.  Yes, I’m that old.  The problem for the IRS has been the processing, some of the Form 1099-MISC were not due until March 31 – which was after a lot of individual income tax returns were filed.  Letters were sent from the IRS to individual taxpayers (that neglected to report that income) et cetera.  The IRS computers had a difficult time in applying the different due dates for the various Form 1099-MISC so incorrect penalty notices were sent out. 

 

I am certain that a lot of the traditional software packages will have this form available.  We have 17 months to get ready for it.  Here is the link to the form:

https://www.irs.gov/pub/irs-dft/f1099nec–dft.pdf

 

What should you do now?  Same as always, have every firm that you pay complete a form W-9.  https://www.irs.gov/pub/irs-pdf/fw9.pdf 

 

Let me know if you have any questions. 

 

Carol

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