For the first time in several years, 1099 forms have changed in a way that will significantly impact most users. Starting in the 2020 tax filing year, most businesses will distribute the 1099-NEC, rather than the 1099-MISC, to contractors. This form, also known as the Non-Employment Compensation form, will change how most businesses file taxes for all kinds of contracted work.
This shift will require an adjustment. However, for those who have still not filed a 1099 tax form 2019, the confusion is exacerbated. This year, you’ll need to complete and distribute the 1099-NEC for work completed in 2020, but you’ll also need to complete a typical 1099-MISC for any outstanding 1099 tax form 2019. Of course, the easiest solution is to file and distribute tax and wage forms on time. But, when you miss the deadline, software tools from Advanced Micro Solutions are here to help.
1099-MISC vs 1099-NEC
If you’ve ever filed a 1099-MISC, you’re likely aware of the Box 7 issue. Those filing this form for Box 7, the “non-employment compensation” box, needed to submit the form at a different deadline than those using it for other reporting purposes. This caused a lot of confusion, especially with the recent rise in gig economy workers and independent contractors. The IRS proposed reinstating the 1099-NEC several years ago, but 2020 will see its first use since the 1980’s.
Now, businesses who utilize contracted labor will use the 1099-NEC to report that income. All other 1099-MISC reporting purposes will remain intact for that form. This is the only reason, or box, that will shift to the 1099-NEC.
If you’re filing a 1099 tax form 2019 for non-employment compensation, it should be a 1099-MISC form – not the 1099-NEC. Additionally, you or your business should file and distribute these forms as soon as possible. Most 1099 forms have a three-year statute of limitations. This means that, if the IRS has not already imposed a fine or penalty, they still have more than two years to do so. Avoid additional fines and tie up any loose ends by completing your late 1099 tax forms now.
Software Solutions for 1099 Tax Form 2019
The best way to address late or incomplete tax filings is to prevent them from happening. While a software solution from AMS can help there, we know that most businesses with late 1099 forms are looking for actual solutions. Advanced Micro Solutions software can help there, too.
The American tax code changes frequently. This means most businesses and accountants will need a software solution that adapts to these changes. This is exactly what AMS can offer. Our W-2/1099 Forms Filer, our base platform, will allow users to file both 1099-MISC forms and the new 1099-NEC. If you’re catching up on late filings while preparing 2020 forms, you’ll be able to do both from our software.
We’re so confident in our software’s ability to handle 1099 tax for 2019 and newer forms that we encourage all users to try a free software demo. This should allow you to try the user-friendly and menu-driven interface, experiment with what’s included, and get a feel for the program. If you have any questions, give our sales and information team a call at 800-536-1099. We’re always happy to help.