What’s New for 1099 Reporting

Dec 7, 2021Accounting, Business

FORMS 1099-MISC AND 1099-NEC

Electronic Filing of Returns
There are new proposed regulations to reduce the threshold for electronic filing requirements in the Taxpayer First Act of 2019. If these regulations are issued, the agency will lower the threshold for filing electronic returns from 250 to 100 returns. If this occurs, it will be effective for tax year 2022 and beyond, with the first filing requirements in 2023.\

Deadlines
The deadlines will remain the same in 2022. Form 1099-NEC must be submitted by January 31, using paper or electronic filing procedures. Form 1099-MISC must be submitted to the IRS by February 28 if filing on paper and March 31 electronically.

Access to Forms
Copies B, C, 1, and 2 have been made fillable online in PDF to ease statement furnishing requirements. The copies will be completed online for furnishing statements to recipients and retaining internal records.

NEC Form Layout
The 1099-NEC has been resized to reduce the height of the form and as a result, the layout changed to a 3 form per page format. This change means that the perforated paper for the NEC form is different than the paper used for MISC form.

Specific Clarification for NEC vs. MISC
Companies can either use box 2 of Form 1099-NEC or box 7 on Form 1099-MISC to report any sales totaling $5,000 or more of consumer products for resale, as well as products sold on a buy-sell or a deposit-commission basis. If you use Form 1099-NEC for this, it must be submitted to IRS by the January 31 deadline.

Corrections
If you need to file a correction on a paper form, do not check the VOID box on the form. A checked VOID box alerts IRS scanning equipment to ignore the form and proceed to the next one so the correction won’t be entered.

See the most recent General Instructions for Certain Information Returns for the proper correction procedure with paper forms. The procedure for electronic corrections is in Publication 1220.

Continuous-use Form & Instructions
The IRS has identified certain 1099 forms as continuous-use forms and instructions. This means is that forms will no longer be updated annually. Instead, the IRS will revise them as needed throughout the year. Be on the lookout for more frequent revisions. The most commonly issued 1099 forms, including 1099-MISC, 1099-NEC, and 1099-INT, and others remain as annual forms with the specific year indicated on the upper right-hand corner.

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