Form 1099-NEC replaces Form 1099-MISC for the reporting of non-employee compensation. This information was previously reported in Box 7 of Form 1099-MISC. The due date for providing the form to recipients and for filing with the Internal Revenue Service is February 1, 2021.
Form 1099-MISC is still in use for reporting rent, royalties, other income and some additional reporting. The due date for providing the form to recipients is also February 1, 2021, but not due to the Internal Revenue Service until February 28, 2021 for paper filing or March 31, 2021 for electronic filing.
If you report rent and non-employee compensation, you will need to file both forms for 2020. If you only report non-employee compensation, you will only need the new Form 1099-NEC.
Payment for legal services is most often reported as non-employee compensation. Gross proceeds paid to attorneys on Form 1099-MISC are usually in relation to settlement agreements.
If you need further explanation of this new form or have other payroll tax questions, please contact Barb Sawdy, CPA, at firstname.lastname@example.org