Starting with the 2020 year tax filing, businesses that pay $600 or more to an independent contractor are required to fill out a new form, the 1099-NEC (Non-employee Compensation). In previous years sending independent contractors’ payment information to the IRS was accomplished by the 1099-MISC. Because the IRS seems to love making changes when it comes to independent contractors, for 2020 taxes (and the foreseeable future), businesses will need to use the 1099-NEC form. Don’t worry—it’s actually a simpler form, and Lendio's software is already configured for this new format. What’s Happening With the 1099-Misc Form? Do I Still Need It? While the 1099-MISC still exists, it no longer applies to traditional independent contractors. Now the 1099-MISC focuses on the truly “Miscellaneous” designation. The 1099-MISC form is now reserved for less frequent expenses, though the most common are: lawyer & attorney fees, rent, and medical and healthcare payments. For a full list, see here. If any of those expenses total at least $600 (or more than $10 for royalty/broker payments or at least $600 total for the other categories), you’ll need to complete the 1099-MISC forms. Note that completing the 1099-MISC form only applies to those specific expenses. If you have independent contractors, you'll need to use the 1099-NEC form. Who Qualifies for the 1099-NEC Form? In short, independent contractors you paid $600 or more to in a year qualify for the 1099-NEC form. Of course, the IRS likes to keep things complicated, so there are exceptions. You don’t need to file a 1099-NEC for independent contractors if they are a C corporation or S corporation. This information can be found on their W-9 form, or you may contact them directly to ensure you’ve got it right. How Do You File Your 1099-NEC Form? First, a 1099-NEC form has both Copy A and Copy B, so you’ll need to fill out both copies for each independent contractor. Copy A goes to the IRS, and Copy B goes to your independent contractor. You have 2 methods for filing—you can either file a paper copy or e-file. \tPaper: To paper file, you’ll need to get the forms from the IRS and print them out, mailing them back to the IRS (Copy A) and your independent contractor (Copy B). \tE-File: It is possible to file electronically—provided you have already been approved to do so. The Lendio Tax Assist tool is integrated to do this. Additionally, if you prefer to paper file, Lendio's software clients can export their 1099 information and upload it in the proper IRS format here. To receive approval to e-file, you must mail/fax a request to the IRS at least 30 days prior to the filing deadline (December 31 in this case). You will also need to ensure that whatever software you use will submit your paperwork in the IRS-approved format. No other submission type (like a PDF) is accepted. What Is the Deadline for Filing a 1099-NEC Form? The filing deadline is January 31 of the following year. If January 31 is on a weekend, then the next business day is the filing deadline. Late filing incurs a penalty that increases over time. Lendio Tax Assist Makes It Easy Lendio's software is integrated both with the e-filing solution as well as paper filing. Either way you choose, we're happy to say that Lendio's software makes it easier. At Lendio, our goal is to help make life easier for small businesses. Get free access to Lendio Tax Assist to help organize your 1099s and track all of your expenses.