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1099-MISC NEC Reporting FAQ for Small Businesses and Accountants

The most used and probably the most important box that gets reported to the IRS on form 1099-MISC 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 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 7 (NEC) of the 1099-MISC form. As an individual if you received form 1099-MISC 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-MISC forms with NEC 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 7 (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-MISC 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-MISC forms with NEC populated?

  1. Step #1: Follow steps 1 through 5 from “Questions #3” above. If you are importing your data select “Import Data > 1099-MISC Forms” from the top menu inside W2 Mate.
  2. Step #2: Select “E-Filing > 1099-MISC Forms”.
  3. Step #3: Enter your data in the E-File screen and create the 1099-MISC 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-MISC 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-MISC by January 31, if you are reporting nonemployee compensation in box 7 (this applies whether you are filing on paper or electronically). So if you are reporting 2018 1099-MISC then the due date for NEC is January 31, 2019, if you are reporting 2019 1099-MISC the due date is January 31, 2020 and so on.

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. It takes around 20 minutes to fill out form 8809 and mail to the IRS. The mailing address is “Department of the Treasury - Internal Revenue Service Center Ogden, UT 84201-020”.

Questions #7: How does NEC get populated on form 1096?

If you are filing one or more 1099-MISC forms with nonemployee compensation box populated, then you have to mark the box “Form 1099-MISC with NEC in box 7, check” on form 1096 (Annual Summary and Transmittal of U.S. Information Returns).


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