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1099 NEC Reporting FAQ for Small Businesses and Accountants

The most used and probably the most important box that gets reported to the IRS on forms 1099 is NEC. In this post we try to cover some of the common questions about NEC that small business and accountants might have.

Questions #1: What does NEC stand for?

In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 1 on form 1099-NEC (or in the past as box 7 on form 1099-MISC).

Questions #2: What gets reported with the NEC Box?

NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 1 of the 1099-NEC form. As an individual if you received form 1099-NEC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Questions #3: How to print 1099-NEC forms with box 1 populated?

  1. Step #1: Open W2 Mate Software .
  2. Step #2: Navigate to the “1099 and 1098 Forms” screen.
  3. Step #3: Select the recipient you want to enter NEC amount for.
  4. Step #4: Highlight Box 1 (Nonemployee Compensation) and enter the dollar amount.
  5. Step #5: Click the Save button.
  6. Step #6: Repeat steps 3 and 4 above for the rest of the recipients.
  7. Step #7: Click the “Print” button from the 1099-NEC forms screen.
  8. Step #8: Select the recipients and type of copy (Federal, State, Recipient and so on) .
  9. Step #9: Click the OK button. Select the printer.
  10. Step #10: Review the form printout.

Questions #4: How to E-File 1099-NEC forms with box 1 populated?

  1. Step #1: Follow steps 1 through 5 from “Questions #3” above. If you are importing your data select “Import Data > 1099-NEC Forms” from the top menu inside W2 Mate.
  2. Step #2: Select “E-Filing > 1099-NEC Forms”.
  3. Step #3: Enter your data in the E-File screen and create the 1099-NEC electronic filing submission.
  4. Step #4: Log into to the IRS FIRE system and upload the resulting file.

Important Note: You will need a TCC code in order to e-File 1099-NEC and other forms with the IRS. If you do not have a TCC code, click here to know how to obtain one.

Questions #5: What is the NEC filing deadline?

File Form 1099-NEC by January 31.

Questions #6: How can you get a NEC extension?

You will need to file form 8809 (Application for Extension of Time To File Information Returns) to get NEC extension. .

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