Form 1099-NEC is an IRS information return that businesses use to report payments made to non-employees during the tax year. You are required to file Form 1099-NEC if your business has paid $600 or more in non-employee compensation within the year.

"Non-employees" refers to individuals or entities who are not directly employed by your business but provide services on a contractual or freelance basis. This category includes independent contractors, freelancers, consultants, self-employed individuals, vendors, and others.

The IRS requires the payers (Businesses or Individuals) to file Form 1099-NEC under the following conditions:

• Made payments of at least $600 or more to the payee during the year.
• Made payments to individuals who are not on your payroll.
• Paid an individual, estate, partnership, or corporation.
• Made payments for services related to your trade or business.

Want to know how to complete Form 1099-NEC? Check out this article to know
how to fill out Form 1099-NEC.

The deadline to file Form 1099-NEC is on the January 31, 2025, for the tax year 2024 irrespective of filing methods (paper or electronic filing). Similarly, the deadline to send the Recipient is also due by January 31st.

TaxBandits allows you to e-file Form 1099-NEC easily and securely. Get started with TaxBandits and file your
returns with the IRS.

Yes, there are some cases in which you are exempt from filing Form 1099-NEC. Below are the circumstances under which you are not required to file Form 1099-NEC.

• You made payments to C or S corporation.
• You paid for the merchandise, telegrams, telephone, freight, storage, and similar items.
• You paid tax-exempt organizations.

The IRS will impose penalties for not filing the Form 1099-NEC on-time. The penalties will be imposed even if the payer failed to distribute the copies to the recipients by the deadline and for providing statements that are incomplete or inaccurate. The penalty ranges from $50/return to $270/return.

If you don’t file a Form 1099-NEC electronically with the IRS on time, you may be subject to
Form 1099 NEC penalties.

W-9 Form collects critical information that you will need to file a 1099 Form at the end of the year to record payments made to suppliers and independent contractors. When filling out Form W-9, the vendor must include their Taxpayer Identification Number (TIN) or Social Security Number (SSN), legal name, and address.

Another advantage of completing Form W-9 online is that it helps avoid Backup Withholding. This is the procedure of withholding a percentage of payments (usually 24%) paid to suppliers that have not submitted an appropriate TIN. The IRS requires businesses to withhold and submit these amounts until the vendor provides an accurate TIN.

One of the major differences between 1099-NEC and 1099-K is that Form 1099-NEC is filed by the payers themselves (businesses or individuals) to report the non-compensation made to the vendors and contractors, whereas Form 1099-K is filed by payment processors to report any payment made through payment card, payment apps, and online marketplaces.

Click here to learn more about the differences between 1099-NEC and 1099-K.

More FAQ on Form 1099