File 1099-NEC Online
Avalara 1099 & W-9 supports the efficient filing of many IRS form types, including the 1099-NEC for non-employee compensation. Get started filing your 1099-NECs now.
What is a 1099-NEC?
The 1099-NEC is among the most commonly filed 1099 forms in America. It is used to report to the IRS compensation paid to non-employees, such as vendors, freelancers, contractors, agencies, and marketplace sellers.
- Purpose: The 1099-NEC is for non-employee compensation that exceeds $600.
- Who Should File: Businesses in the United States should file 1099-NECs to the IRS.
- How to File: It’s possible for businesses to e-file their 1099-NECs, which is often recommended over postal mail for the sake of efficiency and accuracy.
When is a 1099-NEC required?
Typically, businesses in the United States are required to file a 1099-NEC with the IRS for each non-employee to whom they pay more than $600 over the course of a tax year.
A business needs to file a 1099-NEC when they offer compensation to:
- Independent Contractors
- Freelancer Workers
- Professional Service Agencies
- Marketplace Sellers
- Gig Workers
- Consultants
- More
Can I file a 1099-NEC online?
Yes, you can file a 1099-NEC with the IRS on their website or submit it via traditional postal mail. Avalara 1099 & W-9 customers can also e-file 1099-NEC forms directly with the IRS and automatically validate their 1099 recipients’ Taxpayer Identification Numbers (TINs) at the same time to catch errors and reduce the potential for future B-notices.
For step-by-step instructions to e-file, e-deliver, and correct erroneous information in 1099-NEC forms with Avalara 1099 & W-9, watch our video tutorial:
When is the deadline to file a 1099-NEC?
The deadline for a business to file a 1099-NEC with the IRS is January 31st. Businesses must also send a copy of the 1099-NEC to the recipient by January 31st to ensure that their income is accounted for in their annual tax filings.
How do I file a 1099-NEC?
The following steps are best practices for filing a 1099-NEC with the IRS:
- Step 1: Obtain a W-9 from a vendor, freelancer, contractor, agency, or marketplace seller at the point of hiring them, regardless of whether your business expects to pay them more than $600 over the course of the tax year.
- Step 2: Validate that their legal name, address, and social security number in the W-9 are legible and accurate.
- Step 3: Obtain their permission to receive their 1099-NEC via email in January.
- Step 4: At the end of the tax year, fill out a 1099-NEC with information from the W-9.
- Step 5: Electronically file the 1099-NEC with the IRS before the annual January 31st deadline.
- Step 6: E-deliver copy B of the 1099-NEC to the recipient before the annual January 31st deadline. (Use postal mail for a recipient who did not initially opt into electronic delivery and make sure it is postmarked before January 31st.)
- Step 7: Retain a copy of the 1099-NEC for your business records in a safe and secure repository.
- Step 8: Investigate unique state requirements for additional 1099-NEC filings.
Note: All of these steps for 1099-NEC compliance can be automated using Avalara 1099 & W-9, including the necessary collection of W-9s at the point of onboarding. Learn more!
IRS Form 1099-NEC FAQs
These are some of the most common questions that Avalara receives about the 1099-NEC:
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When do non-employees need to receive their copy of the 1099-NEC?
Businesses need to send copies of the 1099-NEC to non-employees, such as vendors, contractors, and freelancers by January 31st every year, the same date that the IRS requires for the initial e-filing. If they are using postal mail, then the 1099-NEC needs to be postmarked by January 31st.
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What are some common mistakes that businesses make when filing a 1099-NEC?
One of the most common mistakes that businesses make is neglecting to validate the information in W-9s that non-employees submit to them. They run the risk of submitting incorrect social security numbers, legal names, and/or addresses to the IRS when they file their 1099-NECs in January.
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What are some of the IRS penalties for failure to properly file a 1099-NEC with the IRS?
Businesses that file with an incorrect Tax ID and didn’t collect a W-9 can be fined $60 to $630 per missing W-9. Businesses that file an incorrect Tax ID with their 1099-NEC will need to rectify it with their non-employee, sometimes involving backup withholding up to 24%. Businesses that can’t rectify their error, will be subject to further IRS penalties.