As 2022 comes to a close, it’s time to start preparing your year-end 1099 forms. If your organization made payments for nonemployee compensation, rents, royalties, prizes, awards, attorney fees, or other services in 2022, you may need to issue a Form 1099.
For the calendar year ending 12/31/2022, there are two versions of the 1099 most likely to apply to your organization:
Form 1099-NEC (nonemployee compensation)
E-file to the IRS by January 31, 2023
Paper file to the IRS by January 31, 2023
Send to recipient by January 31, 2023
Form 1099-MISC (other miscellaneous service payments)
E-file to the IRS by March 31, 2023
Paper file to the IRS by February 28, 2023
Send to recipient by January 31, 2023 if there is no data in Box 8 or Box 10, or by February 15, 2023 if there is data in Box 8 or Box 10
Form 1099-NEC
The 1099-NEC is used to report nonemployee compensation (including fees, commissions, and other forms of compensation for services performed for your organization by a nonemployee). For example, this might include independent contractors, consultants, or businesses hired by your organization.
To determine whether you need to issue a Form 1099-NEC, ask yourself these questions about the person or business that you paid:
Did they receive nonemployee compensation for services rendered to your organization? Any employee compensation (salaries or wages) belongs on a W-2 form. Non-service payments (for the purchase of goods/products) are not generally reported on the 1099.
Between January 1 – December 31, did you pay them a total of $600 or more in nonemployee compensation? Compensation of less than $600 annually does not need to be reported on the 1099-NEC.
Are they classified as an individual/sole proprietor, single-member LLC, trust/estate, partnership, or LLC classified as a partnership? With some exceptions - such as attorney fees - payments made to corporations are not reported on the 1099. You can find the payee’s tax classification on their W-9 Form.
If you answered “Yes” to all of those questions, then you need to file a 1099-NEC.
Form 1099-MISC
The 1099-MISC is used to report other miscellaneous service payments. For example, if your organization pays rent or gives out cash prizes and awards, you may need to issue a Form 1099-MISC.
Ask yourself these questions to determine whether you need to send a 1099-MISC:
Between January 1 – December 31, did you pay them a total of:
$10 or more in royalties or broker payments?
$600 or more in rent, prizes, awards, fishing boat proceeds, medical and health care payments, crop insurance proceeds, gross proceeds paid to an attorney, Section 409A deferrals, or nonqualified deferred compensation?
Are they classified as an individual/sole proprietor, single-member LLC, trust/estate, partnership, or LLC classified as a partnership? With some exceptions - such as gross proceeds paid to attorneys - payments made to corporations are not reported on the 1099. You can find the payee’s tax classification on their W-9 Form.
If you answered “Yes” to both of those questions, then you need to file a 1099-MISC.
Although these are most common type of reportable payments, there are other reportable payments not described here. There are also many exceptions: for example, payments made to a real estate agent or property manager do not typically require a Form 1099-MISC (although the real estate agent or property manager may have to report the rent paid over to the property owner). For complete instructions on all reportable payments and exceptions, visit https://www.irs.gov/instructions/i1099mec.