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Form 1099

Draft 2021 Instructions for Forms 1099-MISC and 1099-NEC Released

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

The IRS has released draft 2021 instructions for Form 1099-MISC, Miscellaneous Information, and Form 1099-NEC, Nonemployee Compensation. Among the changes are a change to the name of Form 1099-MISC; previously it was titled “Miscellaneous Income.”

Background.

A payor must file Form 1099-NEC for each person in the course of the payor’s business to whom the payor has paid at least $600 during the year for services performed by someone who is not the payor’s employee. (Instructions to Form 1099-NEC)

Other payments over $600 that a payer makes in the course of the payer’s business for things such as rent and “other income payments” are reported on Form 1099-MISC.

Draft instructions.

The 2021 draft instructions note the following new things:

Form 1099-MISC title change. The title for Form 1099-MISC has been changed from Miscellaneous Income to Miscellaneous Information.

CheckmarkObservation.

The latest draft version of the 2021 Form 1099-MISC itself, revised as of August 18, 2020, is still titled Miscellaneous Income.

Form 1099-MISC, box 11 (“Fish Purchased for Resale). Box 11 includes any reporting under Code Sec. 6050R, regarding cash payments for the purchase of fish for resale purposes, from an individual or corporation who is engaged in catching fish. For 2020, this was reported on Form 1099-NEC.

Form 1099-NEC, box 2. Payors may use box 2 on Form 1099-NEC (Payer Made Direct Sales Totaling $5,000 or More) or box 7 (Payer Made Direct Sales of $5,000 or More) on Form 1099-MISC to report any sales totaling $5,000 or more of consumer products for resale, on buy-sell, deposit-commission, or any other basis. For 2020, this was reported solely on Form 1099-MISC.

Electronic filing of returns. A filer of more than 250 information returns (such as Form 1099-NEC and Form 1099-MISC) in a calendar year must file the returns electronically. The IRS is looking into lowering the 250-return threshold. See Mandatory e-filing threshold remains unchanged until further notice (09/30/2020).

If the IRS does lower the threshold effective for 2021 tax returns required to be filed in 2022, the IRS will post an article at IRS.gov explaining the change.

To continue your research on reporting of nonemployee compensation, see FTC 2d/FIN ¶S-3658.

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