Beginning with the 2020 tax year, the IRS will require business taxpayers to report amounts paid as nonemployee compensation on the new Form 1099-NEC instead of on Form 1099-MISC as was required in previous years. Generally, businesses will need to use this new Form 1099-NEC if the following conditions are met:

  1. Payment was for compensation made to somebody who is not an employee
  2. The payment is for services during the normal course of your trade or business
  3. The payment is made to an individual, partnership estate or corporation
  4. The payment total for the year is at least $600.


The non-employee compensation will be reported in box one of the Form 1099-NEC and is generally considered self-employment income and likely subject to self-employment tax to the recipient. Any payments to individuals are that not reported on Form 1099-NEC are likely still reported on form 1099-MISC. Examples of these payments would include items such as prizes, awards, fees and other non-business related services.


For more information, visit the IRS website.