2020 marks a slight change in IRS filing requirements. If you’ve filed a 1099-MISC in the past, these changes probably apply to you or your business. Before 2020, you likely filed a 1099 MISC for reporting both your miscellaneous payments and all non-employee compensation. Now, the IRS has reintroduced the 1099 NEC for reporting this non-employee compensation. Since the 1099 MISC has changed with the addition of the 1099 NEC, we wanted to provide an instruction guide to the newest iteration of the 1099 MISC.
Below, you’ll find essential information about the 1099 MISC form for 2020 and what information to include. We will also outline the ways in which filing in 2020 will be different given these changes.
Who Distributes Form 1099 MISC 2020?
Businesses distribute 1099 MISC to any individuals, partnerships, or other businesses to whom that business has paid more than $600 to. Services include rents, royalties, legal fees, and fishing boat proceeds. If your business meets any of the qualifying payments the IRS specifies you must file 1099 MISC by January 31st.
How To Complete the Form
Instructions for completing form 1099 MISC 2020 are fairly straightforward. That said, knowing the steps ahead of the filing process will make data entry and calculations easier.
Businesses should file Copy A of the form with the IRS, Copy 1 with the State Tax Department, Copy B with the recipient, and Copy 2 with the recipient’s state income tax return, if necessary.
The form first asks for the Payer’s name and address. Then, you must input the payer’s TIN and the recipient’s TIN. You must also supply the recipient’s name and address. You need to input an account number if you have multiple accounts with the same recipient.
Boxes indicating certain compensation figures directly follow the required contact information. There are 17 boxes in total. For specific instructions for each box, you can reference the IRS’s complete guide to form 1099 MISC 2020. In essence, you provide the dollar amount you paid the recipient for the respective category. This means that many of the boxes will remain blank if the recipient did not provide that service.
How Filing 1099 MISC is Different in 2020
The most important takeaway is that there is a separate form for reporting non-employee compensation. Before 2020, there would be a box for these payments on the 1099 MISC form. But the new form 1099 MISC 2020 does not have that category. The layout of the 1099 MISC has subsequently shifted with the subtraction of the non-employee category, but the remainder of the content is the same.
AMS 1099 Filing Software
A filing software, like the AMS W-2/1099 filer, is the best way to keep up with tax code changes as they occur. The software is flexible to account for your changing tax form needs. Plus, it supports all 1099 forms which accounts for the addition of the 1099 NEC form. As you get used to the tax form changes brought about in 2020, the filing program is a great tool for accurately completing the right forms.