It’s that time of year that every small biz owner dreads- tax time! Unfortunately this year, there are some new tax forms that every small business will need to use.
On the Small Business Radio Show this week, Jaime Lizotte, the Tax Compliance Solutions Manager at efile4Biz discusses the new tax form on the block, the 1099-NEC and who needs to get one.
Jaime Lizotte on IRS 1099-NEC Form
According to Jaime, the IRS reintroduced the 1099-NEC for all non-employee service compensation to replace box 7 on the traditional 1099-MISC form. The 1099 form can still be used for other paid royalties, rents, and other rewards.
Jaime reminds all small business owners that this is a critical form that needs to be filed by January 31, 2021 by any company that has independent contractors or third party for services that are not on a business payroll. “If you paid them $600 or more from your accounts payable or withheld any federal income taxes from vendors , you probably need to file this form.”
For 2021, there also is changes to the automatic 30-day extension if you need to file 1099s and W-2s late. Jamie explains that the extension is no longer automatic. “You have to complete and submit Form 8809 to request an extension – and you need to have a hardship reason for not meeting the dates such as a natural disaster. “ The Form 8809 must be filed by January 31, 2020. However, it’s important to remember that an extension does not extend the reporting requirement deadline to the recipient of the form. You still have to get recipient copies out by January 31st or you’ll face penalties.
Small businesses can file all these forms to the government and send them to recipients through efile4Biz. You can also check online to make sure they were received.
Listen to the entire interview to understand how to use the updated form on the Small Business Radio Show.
Image: Jaime Lizotte
This article, “Why The IRS Requires the Updated 1099-NEC Form for Contractors” was first published on Small Business Trends