What’s new for 1099 tax forms in 2020

There are a few notable changes for 2020 tax reporting:

New Form 1099-NEC

The IRS reintroduced Form 1099-NEC to report non-employee compensation. Many businesses that have previously filed the 1099-MISC to report non-employee compensation in Box 7 will use the 1099-NEC starting this tax year.

Form 1099-NEC state filings

Form 1099-NEC will not be included in the IRS 1099 Combined Federal/State Filing Program. This means that the IRS will not forward information returns from the 1099-NEC to participating states, so businesses who file the 1099-NEC may need to directly report this information with states.

Revised Form 1099-MISC

The IRS redesigned the reporting boxes of Form 1099-MISC due to the creation of Form 1099-NEC:

  1. Payer made direct sales of $5,000 or more are reported via a checkbox in box 7.

  2. Crop insurance proceeds are reported in box 9.

  3. Gross proceeds to an attorney are reported in box 10.

  4. Section 409A deferrals are reported in box 12.

  5. Nonqualified deferred compensation income is reported in box 14.

  6. Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.

This article is neither legal advice nor tax advice. We recommend that you speak to your tax advisor with any questions or concerns around tax reporting.