IRS form 1099-NEC, which stands for non-employee compensation, is the form to use this year for reporting payments of $600 or more to independent contractors. However, 1099-MISC, the form previously used to report contractor payments, still exists to report other kinds of payments, such as rents, prizes, awards, and other income.
This change strikes a balance the IRS seeks: they want the 1099-NEC forms delivered to independent contractors and filed on or around the date tax season opens (typically, the end of January). 1099-MISC reporting deadlines are later, because businesses may need extra time to finalize their accounting books.
1099-NEC is a requirement for businesses; individuals are not required to report payments made to personal contractors. Payments to C or S corporations, including LLCs taxed as C or S corporations, are exempt. Do not report payments made on credit cards; if applicable, these payments are reported by the financial institutions on 1099-K. Reporting applies to payments made by cash, check, or ACH (including Venmo). Payments are reportable if they are made for services. Business are not required to report payments made for supplies or materials with no service component.
The deadline for providing and reporting 1099-NEC is January 31; however, this year, because the 31st is a Sunday, the deadline is February 1, 2021.