What’s the difference between a 1099 NEC 2020 and a 1099-MISC tax form?
The IRS requires the 1099 NEC form and Form 1099-MISC to record income. They differ, however, in the categories of income they cover:
The new form for reporting nonemployee earnings is 1099 NEC form 2020. If a business pays workers for their services, but they aren’t W-2 employees, it will utilize1099 NEC form 2020. This form is specifically to document payments made to contingent employees.
Form 1099 MISC is a catch-all for revenue that does not fit into other tax forms. It always included compensation for nonemployees, which was reported in box 7 of the form.
Companies will no longer utilize Form 1099-MISC to record remuneration to nonemployees. Form 1099-MISC renamed Miscellaneous Information, will continue to be utilized for various sources of revenue, but box seven will now be dedicated to reporting direct sales of at least $5,000.
The 1099 NEC form 2020 and 1099-MISC are similar in that they have both been used to record nonemployee remuneration at different times.
However, the only thing they have in common right now is that they’re both 1099 tax forms used to record non-employment income.
1099 NEC form 2020 and 1099-MISC are used to record completely distinct income in this category.
Is it necessary for firms to submit both 1099-MISC and 1099-NEC?
Some companies will be required to submit both Forms 1099-MISC and 1099 NEC form 2020 in some situations for the same employee, but this is unusual.
The paperwork you’ll need to fill out is determined by the types of payments your business must record to the IRS. If your business employs contractors and holds a contest or a drawing with monetary rewards, you’ll almost certainly need to submit both forms to disclose these separate sorts of payments. You must complete a separate Form 1099 for each type of 1099 NEC form 2020 if you need to file both types of 1099 forms.