THE EVERETT ADVOCATE–Friday, November 15, 2019 Page 15 New 1099 Form the nonemployee. Other types of income that By Joseph D. Cataldo T he Internal Revenue Service has recently released a draft of its new Form 1099NEC, Nonemployee Compensation. This form will be replacing Form 1099-MISC, Miscellaneous Income, beginning in calendar year 2020. The Protecting Americans From Tax Hikes Act, P.L. 114113, enacted as Internal Revenue Code Section 6071(c), requires that nonemployee compensation be reported to the Internal Revenue Service on or before January 31st following the year of payment to are reported on Form 1099MISC, however, are not required to be reported to the Internal Revenue Service until March 31st following the year of payment to the recipient of that income. Form 1099-MISC has been used for many years to report non-employee compensation to the Internal Revenue Service for payments made in excess of $600 to self-employed individuals such as contractors, plumbers, electricians, carpenters, etc. Form 1099MISC does not have to be issued to corporations. It does have to be issued to general partnerships and limited liability companies (LLC’s). So, beginning in calendar year 2020, taxpayers will be required to issue Form 1099NEC to independent contractors and will no longer be using Form 1099-MISC. This is important as there are so many independent contractors that are not incorporated and that provide services to other taxpayers in any given calendar year in excess of $600. For self-employed individuals, single member LLC’s, and partnerships, it will be a benefit to them to receive a 1099-NEC by January 31 of each year in order to timely file their individual income tax return, or partnership income tax return. If you are not treating someone as an employee, at a minimum, you should at least issue that person a 1099-MISC (for calendar year 2019) and a 1099-NEC (for calendar year 2020). If the person truly qualifies as an employee, then of course, you should be putting that person on the payroll and withhold federal, state, and FICA taxes.
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