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E-file Form 1099-NEC Online for 2022 Tax Year

What is a 1099-NEC?

Form 1099-NEC is the newly implemented form for filing taxes for self-employed individuals. The IRS has directed that starting from the 2020 tax year, employers of labour and organizations will be required to use the 1099-NEC Form. This will be for recording and reporting the income and compensation of non-employees, independent contractors, or freelancers. For payments to non-employees over $600, employers and business taxpayers will have to use the 1099-NEC Form.

Form 1099-NEC is not a replacement for Form 1099-MISC. Form 1099-NEC is only replacing the use of 1099-MISC for reporting independent contractor payments if the company made payments with a total of $600 or more to a non-employee.

Non-employee compensation can include:

  • Fees or Benefits or Commissions or Rents
  • Prizes and awards for services performed by a non-employee
  • Other forms of compensation for services performed for your trade or business by an individual who is not your employee
  • Small businesses or 409A attorneys

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1099-MISC Vs 1099-NEC Forms

Here you need to know about the difference between 1099 MISC and 1099 NEC in detail to file 1099 NEC returns. Prior to the restoration of Form 1099-NEC, the 1099 MISC Form has been the sole tax filing form for employers for years. The IRS re-established an IRS1099 NEC after decades to make a distinction between payments to third-party contractors and miscellaneous income.

The re-introduction of the 1099-NEC Form does not spell the end for the 1099-MISC Form they now serve separate purposes. The major difference is that Form 1099 MISC can be used to report diverse kinds of payments made other than business transactions between businesses and contractors. On the other hand, Form 1099 NEC 2022 is specifically for trade or business transactions with individuals that are not on a business's payroll. Some of the payments and incentives that can be reported in the 1099 NEC Form include fees, commissions, gift items, awards of recognition, etc.

How to File 1099-NEC Electronically?

1099 NEC Form contains two copies. These two copies are categorized into Copy A and Copy B.

Copy A is the copy that will be sent to the IRS, while

Copy B will be sent to the business's contractor albeit with their consent.

The 1099-NEC Form can be mailed directly to the IRS or filed.

1099 NEC Form

Information required to file Form 1099-NEC:

  • Name, TIN or EIN or SSN, address, and phone number
  • Recipient Details (Name, TIN or EIN or SSN, and Address)
  • The total amount of non-employee compensation
  • Federal and state income tax withheld
  • State information

Watch our step-by-step video to E-file Form 1099-NEC with IRS.

Both payer and recipient information includes the filer’s name, address, and taxpayer ID. Non-employee compensation can be found in Box 1 including the total compensation for the past tax year.

Box 4 is to report any federal income tax withheld, as it's uncommon that this will be the case unless the filer has received a backup withholding order for that filer. If the filer’s state has an income tax, include the total payment amount to that filer for the year and any state tax you withheld in Box 5.

Self-employed individuals should not see personal payments made to them during the year on the new form. Instead, the filer's form should report payments made as compensation related to the company's trade or business.

If you are self-employed:

  • You can expect to receive this new form from a business that pays $600 or more for non-employee compensation in the 2021 tax year or later.
  • You should receive these forms by January 31 every year (if January 31 falls on a weekend, then you will receive it the following business day) and use them to prepare your tax return.

Who Must File Form 1099-NEC?

The IRS 1099-NEC is an important form that will eventually be filed by every registered business at some point. After filing Form 1099-NEC with the IRS, you must send your contractor or freelancer a copy. Any business that makes nonemployee compensation payments around $600 or more to at least one payee or withholds federal income tax from a non-employee's payment will now use this revamped form to report those payments and withholding.

The IRS explains in general, that you must report payments you make if all the following conditions apply:

  • When the payment is made to an individual who is not your employee
  • When the payment is made for services during your trade or business
  • When the payment is made to an individual, a partnership, an estate, or a corporation
  • When the payment total was at least $600 for the year Have withheld federal income tax concerning the amount you pay outside contractors for the tax year
  • Made payments for services during the process of making the business transaction or trade.
  • Made payments for renting or buying tools for service.
  • Have withheld federal income tax concerning the amount you pay outside contractors for the tax year

Additionally, businesses will need to file Form 1099-NEC:

  • When they pay an individual at least $10 in royalties, or
  • If the business has withheld any federal income tax under the backup withholding rules regardless of the amount of payments for the year to the nonemployee.

When is the Form 1099-NEC Due Date?

The 1099 NEC Forms are required to be filed by January 31st for the states that participate in the Combined Federal State Filing.

Independent contractors are advised to contact their employers if they are yet to receive a copy of the 1099 NEC Form by January 31st.

Contractors and self-employed individuals would require a copy of the 1099 NEC Tax Form for their respective tax returns.

Failure of businesses to meet the deadline comes with a penalty issued by the IRS between the range of a $50 and $260 fine.

Starting from the year 2021, the IRS recommends sending copies of Form 1099-NEC to workers you paid for non-employee compensation by January 31st or the next business day.

Due date/Deadline to E-file 1099-NEC for the Combined Federal State Filing.

State State Due Date (electronic filings)
Alabama January 31st (if you withheld state tax) March 15th (if you did not withhold state tax)
Arizona January 31st
Arkansas January 31st
California March 31st
Colorado January 31st
Connecticut January 31st
Delaware January 31st
Georgia January 31st
Hawaii February 28th
Idaho February 28th
Indiana January 31st
Kansas January 31st
Louisiana January 31st
Maine January 31st
Maryland January 31st
Massachusetts March 31st
Michigan January 31st
Minnesota January 31st
Mississippi February 28th
Missouri March 1st
Montana January 31st
Nebraska January 31st
New Jersey February 15th
New Mexico January 31st
North Carolina January 31st
North Dakota January 31st
Ohio January 31st
Oklahoma January 31st
South Carolina January 31st
Wisconsin January 31st

Note: If the due date/deadline falls on a Saturday, Sunday, or federal holiday, the filer will need to E-file 1099 on the next business day.

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