Preparing and filing 1099’s will be a little different this year because there’s a new form for tax year 2020 – the 1099-NEC. NEC stands for Non-Employee Compensation. This new 1099-NEC form will be used for amounts you previously reported in box 7 of the 1099-MISC form. This includes amounts over $600 paid to independent contractors, subcontractors, accountants, lawyers, repair companies, cleaning services, commissions to non-employees, etc. Basically, the rules for who does and doesn’t get a 1099 have not changed. The only change is that if you previously sent 1099-MISC forms with amounts in box 7, then you will now send out 1099-NEC forms instead.
Note that you may still need the 1099-MISC. All payments you previously reported in other 1099-MISC boxes will still need to be reported on the 1099-MISC form. For example, many small business owners will still need to report rent paid to landlords in box 1 of the 1099-MISC form or royalties in box 2. That means you may need to order more than one type of form this year.