Subject Matter Expert Greatland Corporation
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IRS Form 1099-NEC Reporting Requirements by State

You are likely aware that the IRS instituted a major reporting change for 2020 by separating out non-employment compensation onto its own reporting form, the 1099-NEC. But you may not know about individual state filing requirements related to this form.

Feb 12th 2021
Subject Matter Expert Greatland Corporation
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1099 NEC
Darylann Elmi_istock_1099NEC

It is important to note that IRS Form 1099-NEC will not be included in the IRS 1099 Combined Federal/State Filing Program (CF/SF) going forward, though you may be used to the information you report being automatically forwarded to participating states. It is ultimately the reporting firm’s responsibility to file separately with each state to which it is required to submit a report.

For around 40 years, filers have been using Box 7 of the IRS Form 1099-MISC to report payments of more than $600 made to outside attorneys, freelance consultants and other independent contractors, but that will change beginning with your reports from tax year 2020. What you may be less clear about is how the new form affects filing with individual states.

As you prepare to file, here are some points to consider:

  • Does your state require a 1099-NEC filing?
  • Have you read the state-specific instructions?
  • What is the state filing deadline? What are the late fees?
  • What filing format do you plan to use and does your state accept it?
  • What are the guidelines for paying out of state contractors?

An added wrinkle: Filers of the new 1099-NEC may also still need to file the 1099-MISC, as that form will still be used to report royalties, rent, healthcare, prizes, and other payments. The 1099-MISC form remains in the CF/SF and will continue to forward information to participating states.

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