What is Form 1099-NEC?
Form 1099-NEC reports non-employee compensation — payments of $600 or more made during the year to independent contractors, freelancers, attorneys, and other non-employees for services performed for your business.
Full explanation
Form 1099-NEC ("Non-Employee Compensation") is the IRS information return businesses use to report payments made to people they did NOT employ as W-2 workers. The form was reintroduced for tax year 2020 to give non-employee payments their own dedicated form, separate from the broader 1099-MISC.
The $600 threshold is per recipient, per year, aggregated across all payments. If you paid one contractor $400 in March and $300 in October, you crossed the threshold and must file. If you paid five different contractors $300 each, no single one crossed it and no 1099-NEC is required for any of them — though good recordkeeping still applies.
Both the IRS copy (Copy A) and the recipient copy (Copy B) are due by January 31 of the year following the tax year. There is no automatic 30-day extension. Penalties for late or missing filings range from $60 to $330 per form depending on how late, with higher amounts for intentional disregard.
Common scenarios: paying a freelance designer for a logo, paying an attorney for legal services to your business, paying a contractor to fix the office plumbing, paying a consultant for a strategy session. The common thread is "someone did work for the business who isn't on the payroll."
Frequently asked questions about Form 1099-NEC
When is a 1099-NEC required?
When you've paid $600 or more during the year to any non-employee for services performed for your business. The threshold is per recipient, aggregated across all payments to that recipient.
What is the difference between 1099-NEC and 1099-MISC?
1099-NEC reports non-employee compensation for services. 1099-MISC reports other miscellaneous income — rents, royalties, prizes, attorney gross proceeds, medical payments. Before 2020 tax year, non-employee compensation lived in Box 7 of 1099-MISC; the NEC form was reintroduced to clarify reporting.
When are 1099-NEC forms due?
January 31 of the year following the tax year. Both the IRS filing and the recipient copy share that deadline. There's no automatic 30-day extension for 1099-NEC like there is for some other 1099s.