People Processes

What is the Difference Between Form 1099-MISC and Form 1099-NEC? In Part 2 of this six-part series, we discuss the important differences between Form 1099-MISC and Form 1099-NEC which made its return in the 2020 tax year after a 38-year absence. Form 1099-MISC, meaning Miscellaneous Income, is an information return that businesses use to report payment types, such as payments made to independent contractors. You can also use Form 1099-MISC to report other payments, like royalties and rents. It is similar to a Form W-2, but specifically for independent contractors. Form 1099-NEC, meaning Nonemployee Compensation, is not a replacement for Form 1099-MISC. It is only used in place of Form 1099-MISC for reporting independent contractor payments starting in 2020. Form 1099-NEC was brought back after 38 years to separate nonemployee expenses and clear up confusion for both the taxpayer and the IRS. Nonemployee compensation uses the following payment types to independent contractors: ●  Fees ●  Co