Learn what you need to be prepared for the tax year 2020-2021 and find the best way to e-file Form 1099-NEC before the due date.
Business taxpayers couldn’t be happier that 2020 is coming to an end. Everything that seemed like a challenge prior to 2020 seems like a breeze compared to what this “new normal” has put all of us through.
2020 was not an easy year. There is no denying that.
However, that should not stop you from achieving your goals and meeting your deadlines (work or otherwise). This includes complying with the tax formalities.
After all, complying with the IRS and filing your tax forms before the due date keeps you and your business in the good books of the IRS.
However, this tax year is not going to be like it used to be. With an additional form being added to the 1099 form series, and updates to the general guidelines for paper filing and e-filing, there’s a lot that needs to be done.
Introduction of 1099-NEC Form to 1099 Form Series
Form 1099-NEC is relatively a simple form that exclusively deals with nonemployee compensations. It requires business taxpayers to report all nonemployee compensations made in the course of business or trade for the tax year.
So, if your business has made any payments to a freelancer, or a vendor, or an independent contractor, then chances are that you need to file Form 1099-NEC to the IRS.
So, when is the due date to file Form 1099-NEC?
What do you need to be prepared?
Are there any new updates to 1099 forms?
In this blog, we will be addressing several such questions and then some.
Due Date for Form 1099-NEC
After re-introducing Form 1099-NEC to the 1099 Form series in September 2020, the IRS decided to abolish the 30-day automatic extension for all 1099 forms. This update brings forward the previous deadline from the 28th of February to the 1st of February 2021.
Due Date for Form 1099-NEC
The due date for Form 1099-NEC is 1st February 2021.
What You Need to Do to Be Fully Prepared
For starters, learn how to read Form 1099-NEC here and gather all the required information. Go through each box of the form, follow-up with your independent contractors or vendors for TIN, state information, and other vital information if needed, and start filling up the boxes.
What You Need to Report in Form 1099-NEC – Nonemployee Compensations
If your business has paid $600 or more as fees or service payment to a freelancer, independent contractor, or vendor, then such payments have to be reported here.
Example Nonemployee Compensations
- Paid Attorney Fees – $750
- Paid Freelance Designer For Designing Creatives – $1000
- Paid Blog Writer for Blog Content – $800
- Paid Contractor for Furnishing Office – $1200
All the above examples are nonemployee compensations and must be reported on Form 1099-NEC.
You can further check out our free webinar (recorded) to understand how to fill Form 1099-NEC for a clearer perspective. To view the recording, you will be asked to register with your email ID. And you can do so for free. We won’t spam! In fact, as and when the IRS rolls out new updates, we will send (the relevant) notifications straight to your inbox. You can opt-out anytime.
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Federal Income Tax Withheld
If you have withheld any incomes from your vendors or freelancers because they did not furnish TIN and other vital information, then such withheld amount must be reported in Form 1099-NEC.
Generally, taxpayers are only required to fill this field for convenience. It’s not compulsory. If you have withheld any state income tax on payments, then such an amount is supposed to be reported in this section of the 1099-NEC form.
However, you must enter the abbreviated name of your state and your State Identification Number.
The most important thing to remember is to make sure that your vendor’s information and your (payer) information have consensus. Inaccurate reports on either side can impact your records.
Paper Filing Form 1099-NEC for Tax Year 2020-2021
If you are planning on paper filing your tax forms, then make sure that the quantity for each form is within the form limits as specified by the IRS.
E-filing Form 1099-NEC for Tax Year 2020-2021
If you are planning on e-filing, remember that there is no extension for e-files and all filings (paper or electronic) have to be submitted to the IRS before the 1st of February (postmarked if paper filing).
If you are not familiar with e-filing or if this is your first time choosing the electronic filing method, then make sure that you are eligible for e-files through FIRE, an IRS e-file compliance program.
The biggest concern for e-filing is that your computer needs to have certain software installed, which helps in producing forms in a proper format, which the IRS accepts. The IRS does not accept PDF or other file formats.
If this sounds complicated, then you can choose e-file compliance companies like Tax1099 that help business taxpayers securely e-file their tax forms.
No software installations. No hidden charges.
E-file Form 1099-NEC with Tax1099
There is no better time to opt for electronic filing than now. With the Covid-19 restrictions and safety concerns on the rise, it’s best for business taxpayers to bulk-file their tax forms securely through a reliable platform, such as Tax1099.
Tax1099 is an IRS-authorized e-filing platform enabling over 150,000 businesses to submit their e-files to the IRS. With 40+ forms to choose from Tax1099’s form directory, easy data entry features, and dynamic integrations, Tax1099 is designed to help every business, no matter their size and type.
Security and compliance scare is a thing of the past. Tax1099 is state and federal compliant and delivers bank-grade security to all its users with 256-bit AES (Advanced Encryption Standard).
The best part? You do not have to pay Tax1099 anything until you decide to submit your forms to the IRS. And when you do, each form will cost you as little as $0.55.
Sounds fair, doesn’t it?
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