As year-end approaches, one thing to remember is that the 2020 tax year marks a change in how income for nonemployees is reported to the IRS. Here are 5 things to know:
The Form 1099-MISC used in prior years to report income for nonemployees is replaced by Form 1099-NEC beginning with the 2020 tax year (tax reporting to be done in January 2021).
Income from stock compensation will be reported in Box 1 of the new form. This is a change from the Box 7 used on Form 1099-MISC.
Income from prior years (2019 and prior) should still be reported on a Form 1099-MISC. For example, if the company forgot to send a 1099-MISC to somebody in 2019, this is rectified by still sending a 2019 Form 1099-MISC, not the new 1099-NEC.
In addition to stock compensation for non-employees, director fees should also be reported on Form 1099-NEC.
5. Reporting is required for payments of $600 or more, same as the 1099-MISC.
Before mailing Form 1099-NEC to nonemployees, be sure you have the correct address. This is especially important this year, as there has been much mobility during the pandemic. For more tips on year-end preparation, see the October 22 blog on "3 Things for Your Year-End Checklist."
3 Things for Your Year-End Checklist
Are you ready for year end? We are in the home stretch of 2020, the year that redefined “normal.” In that context, it’s hard to imagine that all of our year-end proc...Read More
Year-End Tax Updates
The end of the year always brings a few tax updates. Here are the ones that have been announced so far:
Per the SSA’s Read More
5 Trends in Stock Plan Administration Staffing and Practices
Next week, Joseph Rapanotti of Deloitte Consulting and I will be presenting highlights from the NASPP/Deloitte Consulting 2020 Domestic Stock Plan Design survey during the webcast “Read More
3 Things to Have on Your Stock Plan Radar
2020 has been a year of the unprecedented and uncertain. Along those lines, it can be easy to lose tabs on what the priorities should be. While I can’t speak for an individual organiz...Read More
7 More Things to Know About the Payroll Tax Holiday
As I noted in my blog on August 17, President Trump has issued an executive order establishing a payr...Read More