New Reporting Rules for Non-Employee Compensation of $600 or More
There is a new Form 1099-NEC, Nonemployee Compensation, for business taxpayers who pay or receive nonemployee compensation
The Internal Revenue Service now requires that non-employee compensation paid to non-corporate entities of $600 or more in a year be reported on IRS Form NEC
Starting in tax year 2020, payers must complete Form 1099-NEC to report any payment of $600 or more to a payee.
Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021.
There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.
Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number (TIN) to the payer or the IRS notifies the payer that the TIN provided was incorrect PDF.
A TIN can be one of the following numbers:
- Social Security
- Employer identification
- Individual taxpayer identification
- Adoption taxpayer identification
What Is Backup Withholding?
Backup withholding can apply to most kinds of payments reported on Forms 1099 and W-2G. This means that the person or business paying the taxpayer doesn’t generally withhold taxes from certain payments. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is backup withholding.
- Instructions for Forms 1099-MISC and 1099-NEC
- General Instructions for Certain Information Returns
- Publication 15, (Circular E), Employer’s Tax Guide
Tax Planning Tip #1
If you have not already done so, make sure that you have a complete and accurate Form W-9, Request for Taxpayer Identification Number and Certification on file, for every non-corporate vendor who provides services to your business.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander, an Enrolled Agent and a Certified Tax Resolution Specialist, is an affiliate member of the Suburban West Realtors® Association, a member of the American Society of Tax Problem Solvers (ASTPS), PA Society of Tax & Accounting Professionals (PSTAP), the National Society of Accountants (NSA) and the National Association of Tax Professionals (NATP). He is the author of “How to Resolve Your IRS Tax Debt Problems” as well as a book on how to start your own business. He has been practicing in Exton for 19 years. His firm serves clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
For individual tax payers, real estate professionals, contractors and other self-employed individuals with IRS tax debt issues or tax planning issues, feel free to contact me at (610) 594-2601 or by email at email@example.com.
Keystone Financial Solutions, Inc. specializes in providing innovative tax planning, tax preparation, and solving IRS tax debt problems. The company’s web site is https://www.keysolutions.us and its telephone number is (610) 594-2601.
By visiting our website you can learn about the 5 Secrets the IRS Doesn’t Share and order a FREE SPECIAL REPORT: Should You Represent Yourself or Hire a Tax Professional.
BE SURE TO READ THE DISCLAIMER PAGE: Tax laws, IRS rules and regulations change frequently. Although we hope you’ll find this information helpful, this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher shall not assume liability for any losses, injuries, or damages from the display or use of this information. Should you wish to engage our firm to represent you and your individual situation, please call us at (610) 594-2601.
Copyright © 2020 Keystone Financial Solutions, Inc. All rights reserved.