What is a 1099-NEC Form?
A 1099-NEC (Non-Employee Compensation) form is a tax form used to report income that a person or business received from a nonemployee.
It is used to report payments made to independent contractors, freelancers, and other self-employed individuals. The form is used to report payments made for services, such as consulting, professional services, or other types of nonemployee compensation.
The 1099-NEC form is similar to the 1099-MISC form, which is used to report miscellaneous income, but it is specifically used for nonemployee compensation.
The payer of the nonemployee compensation is responsible for issuing a 1099-NEC form to the recipient, and for filing a copy of the form with the IRS by the end of January, the following year of the payment. The recipient of the nonemployee compensation is responsible for reporting the income on their personal income tax return, and for paying self-employment taxes on the income.
It’s important to note that there are threshold amounts for the nonemployee compensation to be reported on a 1099-NEC form: it’s generally $600 or more during the tax year.