What is a 1099 NEC and Who gets one

 

 First let's start by addressing the name change, a 1099-nec and 1099-misc are not the same thing however until 2020 the 1099 misc was used for reporting non- employee compensation where as now the 1099-NEC is used for this purpose.

 Now that we have that all cleared up who gets a 1099- NEC?   Any individual not on the payroll on a contract to complete a project or assignment, who was paid more than $600.00

So in plan English what this means is if you made an individual more than $600.00 to do graphic design, social media manager, design your website, update your SEO, ETC,   and they are not an S-corp or C- corp you would issue them a 1099- NEC.

Do you have to have a contact? NO, this is just a way of saying that you agreed on a task and price, however they are not an employee because you did not provide set hours or specifications on how they must complete this task.

Do you have an affiliate program ? If you paid one of your affiliates more than $600.00 commission you are required to send them a 1099-NEC

 Who doe not get a 1099- NEC?

  • s-corps or c-corps
  • Business coaches or mentors who are directly related to the further of your business knowledge 
  • Employees
  •  Anyone you paid with paypal ( paypal will issue a 1099- NEC if needed)
  •  Anyone you paid more than $600 with a credit card or debit card ( they will issue a 1099- NEC if needed)

 you can find out more about 1099- NEC HERE

 What should I do if someone wants to send me a 1099-NEC however it is not required?

 Send them to the IRS website for more information https://www.irs.gov/instructions/i1099ms

If they won't take no for an answer let them send it. You will be claiming the income either way and you are not a tax professional so trying to convivence them otherwise is often difficult. 

 What should I do if I didn't get a 1099- NEC and should have ?

 First double check with the payee to make sure that they didn't send you one and that it didn't get lost in the mail or sent to the wrong address

 Lastly claim the income, ALWAYS claim the income even if you didn't receive a 1099- NEC.

  Looking for a simple way to track your business income and expenses ? Check out our expense Tracker spreadsheet for creative business owners https://kdbehindthebooks.com/expense-tracker-27a5gzp1r5

 We would love to invite you to come hang out with us and ask all your business and finance questions in Money Wise Creatives FB group

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