What is Form 1099-NEC?
Form 1099-NEC is used to report payments of $600 or more made to independent contractors, freelancers, or other nonemployees for services provided during the year.
Who must file?
Your company must issue a 1099 to the independent service provider if:
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You paid $600 or more in the year to a service provider (physical products do not require reporting). The provider is an independent contractor, not an employee.
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The service provider is an individual or entity based in the United States and submitted a W-9 form to you.
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The service provider is not a C Corporation or S Corporation (with exceptions).
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The payment was not made through credit card or digital platforms (PayPal, Stripe, Venmo, etc.), since those processors must issue the appropriate form (usually the 1099-K) directly to the service provider.
What needs to be reported?
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Total compensation paid to the contractor.
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Name, address, and taxpayer identification number (TIN) of the recipient.
Penalties
Failure to file or incorrect filing can result in penalties ranging from $60 to $310 per form, depending on how late the filing is.
