1099  NEC

• What is considered non-employee compensation?
  Basically, these are any payments to non-employee service providers, such as independent contractors, freelancers, vendors, consultants and other self-employed individuals (commonly referred to as 1099 workers).

According to the IRS, a combination of these four conditions distinguishes a reportable payment in Box 1 of the 1099-NEC:

• It is made to someone who is not your employee
• It is made for services in the course of your trade or business
• It was made to an individual, partnership, estate, or, in some cases, a corporation
• Payments were $600 or more for the calendar year

Special Ruling:

Payments not subject to the $600 threshold for Form 1099-NEC must still file Form 1099-NEC in either of these circumstances:

• Federal withholding exists on any non-employee compensation payments made to a recipient; prepare a Form 1099-NEC to report it and the corresponding amount of compensation.
• Royalties or similar payments exceed $10, prepare a Form 1099-MISC and record the amount in Box 1. Working interests in oil and gas activities are an exception, however. Since these payments are characterized for tax purposes as nonemployee compensation, the amount should be reported via Box 1 on Form 1099-NEC.

File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

• At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
• At least $600 in:
  1. Rents (box 1);
  2. Prizes and awards (box 3);
  3. Other income payments (box 3);
  4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
  5. Any fishing boat proceeds (box 5);
  6. Medical and health care payments (box 6);
  7. Crop insurance proceeds (box 9);
  8. Payments to an attorney (box 10) (seePayments to attorneys, later);
  9. Section 409A deferrals (box 12); or
  10. Nonqualified deferred compensation (box 14).

Figure 1.0 Summary of Contents

Figure 2.0 Form 1099-NEC

1099 Parts and Details

Figure 3.0 Form 1099-MISC

1099 Parts and Details:

NOTE:

• Don't use Form 1099-NEC to report personal payments
• Don't use Form 1099-NEC to report employee wages; use Form W-2 instead

1. Click Ledger
2. Click 1099
3. Click new
4. Select company from the dropdown list
5. Enter description of the 1099 batch
6. Select year from the dropdown list
7. Flag whether it will be a special Non 1099 batch by leaving it blank or check the box to create 1099 batch for people flagged to NOT receive a 1099
8. Select Agent Comm calculation
   • Take home pay (cash basis) is the default when no option is selected in Agent Comm
9. Click start

The column, amount, must be entered into the Box 1 of 1099 NEC for and some Income from Rent.
In 1099 MISC, there is separate box for Rent in Box 1.

NOTE:

If the agent received a bill from rent, it should be NEC, but if it is an LLC or Corporate name, it should be MISC.

If half of the year, an agent worked as an individual and the other half of the year the agent is an LLC or corporate, there will be two 1099s. Half of the year 1099 NEC is for the agent as an individual and 1099 MISC for the corporate.

• Name
• Mailing Address
• Tax ID
• 1099 Type
• gets 1099?

Only a user with the 1099 TaxID role will be able to see the tax ID entered in the person's profile in People > People links.

1. Go to Security
2. Click Users submenu
3. Click search button to find the user
   • a new window will appear, fill in accordingly
4. Check the role 1099 TaxID under roles tab
5. Click save

• 1099 Person Data Review - to check if there is any missing information from the agent's profile that is needed for 1099
• Agent 1099 Review – shows the data summary on what is included in the agent's 1099
• 1099 Data Export – this will show the raw data of the 1099 batches created