Filing a 1099-NEC (Nonemployee Compensation) form for the 2024 tax year involves several steps and requirements.
Who Needs to File a 1099-NEC?
You must file a 1099-NEC if you paid $600 or more to a nonemployee (e.g., an independent contractor) for services related to your trade or business during the tax year.
1. Form Overview:
- Report nonemployee compensation on the 1099-NEC form.
- Do not use this form for wages paid to employees; use Form W-2 for that.
2. Eligibility:
- Payments must have been made to an individual or business (excluding corporations, unless they are attorneys).
- The payment must be for services performed, not goods.
3. Important Deadlines:
- January 31, 2025: 1099-NEC forms must be sent to recipients and filed with the IRS, whether filing electronically or on paper.
- Failure to meet these deadlines may result in penalties.
4. Electronic Filing Requirements:
- If you’re filing 10 or more 1099 forms, you must file electronically via the IRS Filing Information Returns Electronically (FIRE) system.
5. Information You’ll Need:
- Payee’s name, address, and Taxpayer Identification Number (TIN).
- Your business’s name, address, and Employer Identification Number (EIN).
- Total payment amount made to the payee.
6. Penalties for Noncompliance
- Failing to file or provide accurate forms may result in penalties ranging from $50 to $290 per form, depending on the lateness or severity of the error.
