Multiplier Logo
Loading Animation Image

Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

Search Icon
# A B C D E F G H I J L M N O P R S T U V W X Y Z

Form 1099-NEC

What is Form 1099-NEC?

Form 1099-NEC, “Nonemployee Compensation,” is a tax form introduced by the Internal Revenue Service (IRS) for reporting payments made to freelancers, independent contractors, and other non-employees. This form is specifically used for reporting payments totalling $600 or more in the business year for services performed by someone who is not an employee.

Purpose of Form 1099-NEC

The purpose of Form 1099-NEC is to streamline the reporting of nonemployee compensation, separate from other types of income that were previously reported on Form 1099-MISC. This distinction helps improve the efficiency and accuracy of tax data processing by the IRS and assists payers in complying with their reporting obligations.

Who Needs to File Form 1099-NEC?

Businesses and individuals who make payments of $600 or more to a nonemployee for services rendered during the year are required to file Form 1099-NEC. This requirement applies to payments made to independent contractors, freelancers, sole proprietors, and other self-employed individuals who are not on the payroll.

Filing Requirements and Deadlines

Form 1099-NEC must be filed with the IRS and a copy provided to the recipient by January 31st following the year in which the income was paid. This deadline is firm for both paper and electronic filings, as it aligns with the deadline for businesses to send out W-2 forms to their employees.

Completing Form 1099-NEC

When filling out Form 1099-NEC, it is important to accurately report the total amount paid to the nonemployee, along with their name, address, and taxpayer identification number (TIN). The form contains only a few boxes, making it relatively straightforward compared to other tax forms. Accuracy in completing this form is critical to avoid penalties for incorrect or incomplete filings.

Challenges and Best Practices

A common challenge with Form 1099-NEC is ensuring that all required information is collected throughout the year from all nonemployees. Businesses should implement systems to maintain accurate and up-to-date records of all payments made to nonemployees. Additionally, it’s advisable to verify the accuracy of the TIN and other personal details before submitting the form to prevent IRS rejections or the need for corrections later.

Form 1099-NEC is crucial for accurate tax reporting of nonemployee compensation, ensuring that businesses meet their tax obligations and that independent workers are informed of their taxable income for the year.

Ready to take the leap? Choose Multiplier as your EOR partner

Gain fresh perspectives

Take a look at our new blogs and e-books


Making work work: Embracing globalization and innovation in 2024

Read more

Mp More Link Arrow Right

Multiplier named Industry Leader and IEC Star in the 2024 IEC Global EOR Study

Read more

Mp More Link Arrow Right
Top Six Places in the USA and Beyond That Pay You to Live There

Top Six Places in the USA and Beyond That Pay You to Live There

Read more

Mp More Link Arrow Right
Footer 24x5 New Img2x

An all-in-one international employment platform