IRS Form 1099 Changes 2020: Did you know about changes made to Form 1099 in the 2020 tax year? Several changes have been made to Form 1099 which will pose challenges for businesses across the country. Before filing your information return, every individual has to go through the IRS guidelines and instructions 2020.
We’ll provide you a rundown of the changes made in the 1099 Forms and suggest how you can best prepare. We also provide you information about the changes made in 1099 Forms for the 2020 tax year.
What are the changes made in 1099 Forms 2020?
For the calendar year 2020, the requirements for reporting “Non-employee compensation” will include in a new Form. Previously, all non-employee compensations payments were reported to recipients and the IRS in Form 1099 MISC box 7.
But now in the 2020 tax year, taxpayers report the payments made to non-employees for services performed through the new 1099 NEC Tax Form. IRS changed 1099 MISC box 7 payments to new Form and revised the 1099 MISC Form. The major change in 1099 MISC Form box 7 payments. From the current tax year 2020, payers use box 7 to report direct sales of consumer products for resale.
Federal 1099 Form reporting NEC
Businesses will need to be ready to use this new Form. Taxpayer must use Federal 1099 Form reporting non-employee compensation to report:
- Payments made to a non-employee of about $600 or more during the calendar year.
- Non-employees receive compensation for performing service on course of trade or business are reported.
- The non-employee who you paid may be an individual, or an entity, or estate, or partnership.
If you’re an individual person and working for a business as a freelancer, and you receive $600 annually. The business file 1099 NEC Form reporting non-employee compensation of $600 for working as a freelancer.
Printable 1099 MISC Form changes
After reviving back Federal 1099 NEC Tax Form, the IRS made changes in reporting boxes of the Form. Following are the printable 1099 MISC Form changes in the current tax year 2020:
- Include prizes and awards, cash paid from a notional principal contract to an individual, and other income payments in box 3.
- Any fishing boat proceeds are reported using box 5 of the Form.
- Box 7 payments are checked when the payer made direct sales of consumer products for resale.
- Substitute lieu of dividends reported through box 8.
- Use box 9 to report crop insurance proceeds through the Form.
- Gross proceeds paid to attorneys for providing legal information are reportable through box 10.
- Use box 12 to report section 409A deferrals.
- Non-qualified deferred compensation reported through box 14.
Form 1099 preparing process
Businesses prepare 1099 Form considering all the changes made in the 2020 tax year. Following process include in preparing a 1099 Form:
- First of all, you need to start reviewing your independent contractor activity early. Make sure that you receive a W-9 Form from each non-employee to whom you paid compensation in 2020 tax year. If you didn’t receive a W-9 Form, start contacting your individual contractors as soon as possible. Keeping your non-employee records up to date the key to preventing backup withholding taxes.
- Next, the accounting system ready for the 1099 Form changes. Update your existing accounting software, then use the appropriate form to report the transactions.
- Check whether the Form you’re filing on the correct date and also the correct form to avoid IRS heavy and hefty penalties.
When are 1099 Forms due?
Form 1099 reporting non-employee compensations are due to the recipients and to the IRS by February 1st, 2021. The due date same for paper filing and electronic filing of 1099 NEC Form.
1099 MISC Form reporting miscellaneous income are due to the IRS by March 1st through paper Forms. File the Form 1099 MISC online with the IRS by March 31st, 2021. Furnish the recipient copies by February 1st, 2021 respectively.
Note: When you’re using 1099 MISC Form to report box 8 or box 10 payments, furnish Copy B to the recipient by February 16th, 2021.
Filing 1099 Forms online
The best approach to report 1099 Form to the IRS through online filing. As we know that, online filing of 1099 Forms less the burden to the taxpayers. It reduces risk of facing penalties. Online filing of 1099 Forms submitted to the IRS within minutes. The major advantage of online filing 1099 Forms, it provides cloud storage of transactions of nearly 4 years. The payors can file 1099 Forms sitting at one place, irrespective of time. Choosing the IRS certified e-file provider plays a major role when filing 1099 Forms online. IRS authorized e-file provider submits information safely and securely to the IRS on time. IRS also has the advantage of on time receiving 1099 Form online.
File your respective 1099 Form with the recipient and to the IRS on time by choosing the best e-file provider. Login or signup into the e-file provider site and create a new 1099 Form. E-filing 1099 Forms allows multiple access to the filers.
Have you got the required information that you’re searching for? Then file your 1099 information returns before the deadline. We provide you service to file your 1099 Forms online at 1099 NEC Online Form. You can choose us to file your information returns as we are an IRS certified e-file provider.