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19 May 2022, 14:54 GMT+10
There are over 32 million small businesses in the US. Chances are, many of these companies will be required to file 1099 forms during tax season. But…what is a 1099 form?
While there are several 1099 forms, the two main forms this article will focus on are the 1099-MISC and the 1099-NEC. There are certain times you must file each, so understanding 1099-MISC versus 1099-NEC is vital for business owners. You don't want to file incorrectly and face IRS penalties.
Keep reading to learn the difference between 1099-MISC and 1099-NEC forms. You'll also learn when to use each and the requirements for filing.
What Is a 1099 Form?
A 1099 is a form that is used to report income that was not subject to withholding. It is a form that is used to report income that was not subject to withholding. The IRS requires businesses and individuals who are paid $600 or more in a year from one source to fill out this form.
1099-NEC
A 1099-NEC form is a tax form that is used to report payments made to a non-employee. A fillable 1099-NEC form is used by businesses that are not required to withhold federal income taxes from the payments they make.
The 1099-NEC form is often used by independent contractors, freelancers, and some small businesses. The IRS requires that all payments of $600 or more be reported on this form. You really need to check out the 1099-NEC generator to create forms quickly.
1099-MISC
A 1099-MISC form is a tax form that is used to report miscellaneous income. It is often used by freelancers, contractors, and other self-employed individuals.
The 1099-MISC form can be filed with the IRS by the company that paid you or by you if you are self-employed. The IRS uses this information to determine how much in taxes you owe for the year.
Difference Between 1099-MISC and 1099-NEC
The difference between 1099-MISC vs. 1099-NEC is that the former is for self-employed individuals and the latter is for independent contractors.
1099-MISC is for self-employed individuals who are not incorporated. They are not considered employees of the company they work for, but instead, they are considered to be in business on their own.
1099-NEC is for independent contractors who are incorporated. They have a contract with a company to provide services or labor and they are paid by the hour or by the project.
Generate 1099 Forms Today
Now that you understand the differences between the 1099-MISC and 1099-NEC forms, you are ready to create the correct forms for yourself or your workers. We hope this article covered everything you needed to know to generate your tax documents.
Are you ready to create fillable 1099-NEC forms? Good! You need to quickly check out the 1099-NEC creator to create the form you need today!
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