Form 1099-NEC Renewed for 2020 Tax Year December 9, 2020After a 38-year absence, Form 1099-NEC has made its return in the 2020 tax year. The 1099-NEC is now used to report non-employee compensation. In previous years you used form 1099-MISC to do this. Although the 1099-MISC is still in use, contractor payments made in 2020 and beyond will be reported on the new form 1099-NEC.What is Form 1099-NEC and Why It Made a ComeBack?Form 1099-NEC, Nonemployee Compensation, is a form that solely reports nonemployee compensation. Before the 2015 Protecting Americans from Tax Hikes Act (PATH Act), taxpayers could file one Form 1099-MISC to report nonemployee compensation and miscellaneous income items by February 28 each year. The PATH Act changed the Form 1099-MISC due date to January 31 for reporting nonemployee compensation.Because of the due date change for nonemployee compensation, taxpayers had to begin separating nonemployee compensation using two Forms 1099. This change not only caused a lot of confusion for business owners and taxpayers, but it also caused the IRS to mistakenly treat forms received after the January 31 deadline as late returns. The IRS has brought back Form 1099-NEC to separate nonemployee expenses and clear up the confusion. What Does This Mean For Me?The renewed use of this form will impact businesses that pay for services from non-employees, such as consultants, non-employees who receive sales commissions, and gig economy workers that are classified as independent contractors. As a result, if your business hired a contractor and paid them more than $600 in a year, it’s your responsibility to file a Form 1099-NEC with the IRS and send a copy to the contractor. How Can KatzAbosch Help?If you have questions about how to prepare for the reissued form 1099-NEC or how to complete either of the 1099s please contact your KatzAbosch representation or contact us.About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.