Beginning with reporting for the 2020 tax year, payments made for non-employee compensation will no longer be reported in box 7 of Form 1099-MISC. Instead, these amounts must be reported in box 1 of Form 1099-NEC.

Generally, the same rules for reporting non-employee compensation as on Form 1099-MISCs in the past apply to the current Form 1099-NEC:

  1. Payment is made to a non-employee,
  2. Payment was made for services rendered,
  3. Payment was made to a non-corporate entity, and
  4. Payments, during the year, totaled $600 or more

The most common examples of payments that should be included on Form 1099-NEC are:

  1. Fees paid for professional services, including attorneys (no matter how they are structured i.e. LLC, LP, Corp)
  2. Commissions to non-employee salespersons
  3. Fees paid to independent contractors
  4. Director’s fees to members of the board of directors

The deadline for furnishing Form 1099-NEC to the recipient remains January 31.