Small Business Owners – Your First Tax Deadline is February 1st, 2021.
Many of you in the past have had to issue a 1099-MISC to people you hired and paid, but not as W-2 waged employees. These forms have changed for the first time in a very long time, so this is a courtesy heads up. The 1099-MISC has a much more limited use, but has not gone away.
However, there is no longer a Box 7 for nonemployee compensation on the 1099-MISC. If you used Box 7 in the past, you will need to switch to the new IRS form 1099-NEC, which is specifically for people who you have hired, including Independent contractors, gig workers, or self-employed individuals who you have previously sent a 1099-MISC for Box 7.
Remember, giving them a form 1099-NEC is only part of your responsibility. You need to gather all 1099s that you have filled out and send them together with the cover Form 1096 to the IRS as well. That information needs to be mailed to the IRS by January 31st (February 1st for 2021).
You need to retain proof that it was filed on time, so we would advise sending it by a method that would produce a tracking number, in case you need to provide that proof.
Without these forms, the IRS will make their income your income, without mercy. For additional information, check out the link below: