![]() ![]() Non-wage withholding pursuant to Internal Revenue Code (IRC) 3406 (Backup Withholding) and 3402.There are two withholding types for non-wage withholding: Withholding may be required on nonemployee compensation. Backup Withholding and Nonresident Alien Withholding ![]() These exceptions are listed in the Instructions for Forms 1099-MISC and 1099-NEC PDF. There are certain situations where a Form 1099-NEC is not required. In either case, they should be aware of their tax responsibilities, including filing and reporting requirements, for these workers. You must also send a copy of this form to the IRS by January 31.Īlso note that independent contractors may have their own employees or may hire other independent contractors (subcontractors). If you paid someone who is not your employee, such as a subcontractor, attorney or accountant $600 or more for services provided during the year, a Form 1099-NEC needs to be completed, and a copy of Form 1099-NEC must be provided to the independent contractor by January 31 of the year following payment. Payers use Form 1099-NEC to report payments made in the course of a trade or business to others for services. The separate instructions for filers/issuers for Form 1099-NEC are available in the Instructions for Forms 1099-MISC and 1099-NEC PDF. Form 1099-NECīeginning with Tax Year 2020, you must use Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC. The W-9 should be kept in your files for four years for future reference in case of any questions from the worker or the IRS. This form can be used to request the correct name and Taxpayer Identification Number, or TIN, of the payee. If you've made the determination that the person you're paying is an independent contractor, the first step is to have the contractor complete Form W-9, Request for Taxpayer Identification Number and Certification. ![]()
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