Form 1099-NEC reports non-employee compensation of $600 or more paid to independent contractors during the tax year.
Why Form 1099-NEC matters for employers
Form 1099-NEC was reinstated by the IRS in 2020 to report non-employee compensation separately from Form 1099-MISC. Any business that pays an individual independent contractor $600 or more during the tax year must issue a 1099-NEC by January 31 of the following year.
The form covers payments for services performed by non-employees including freelancers, sole proprietors, and single-member LLCs. Payments to corporations generally do not require a 1099-NEC, with exceptions for attorney fees and medical payments.
Failure to file accurate 1099-NECs by the deadline can result in penalties ranging from $60 to $630 per form depending on how late the filing is and whether the failure was intentional. Employers must also furnish a copy to the recipient by January 31.
Before issuing any 1099-NEC, employers should collect Form W-9 from each contractor to obtain the taxpayer identification number (TIN). Backup withholding of 24% applies when a contractor fails to provide a valid TIN. Proper contractor classification is critical - misclassifying employees as contractors creates payroll tax liability, penalties, and back pay exposure.
How BEG handles 1099-NEC filing for clients
BEG Managed Payroll manages contractor payment tracking, W-9 collection, and 1099-NEC filing as part of fully managed payroll at $25-$45 per employee per month. Learn about BEG Managed Payroll.
Frequently asked questions
When is Form 1099-NEC due?
Form 1099-NEC is due to recipients and the IRS by January 31 of the year following payment. There is no extended deadline for paper vs. electronic filing as with some other 1099 forms.
Do I need to file a 1099-NEC for payments to corporations?
Generally no. Payments to C-corporations and S-corporations are exempt from 1099-NEC reporting, with exceptions for attorney fees and certain medical payments.
What if I miss the 1099-NEC deadline?
Late filing penalties range from $60 per form (30 days late) to $630 per form for intentional disregard. Filing as soon as possible after the deadline reduces the penalty amount.
Want payroll fully managed?
BEG handles everything at $25-$45 PEPM. See your exact price in 90 seconds.
About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
Connect with Anthony on LinkedIn →