What's the difference between 1099-MISC, 1099-K, and 1099-NEC Forms? Let's clear the confusion and understand what exactly each of these forms is needed and used for with the help of Brittney Suttle!
Brittney is an Indianapolis-based CPA, founder of Knies & Co, a virtual CPA firm, and Prosper Simply, an online financial course catalog for business owners. She joins us on The Legal Paige Podcast to talk all about 1099s. If you have questions regarding getting your 1099s prepared and ready for January, including updated tax laws, and the new $600 threshold for 1099Ks, this episode is for you.
Brittney's mission is to make money more approachable for women, and she passionately works to help female entrepreneurs get more out of their business (& life) through great money management & simple systems.
"A 1099-NEC stands for non-employee compensation and this is a newer form. So think back to two years ago, this form didn't exist. This for is really for your independent contractors, anyone who is providing a service for your business, they will get a 1099-NEC. For a majority of you listening, that's probably the form you are going to stick to."
- Brittney Suttle on the definition of a 1099-NEC form.
"A 1099K is not something you are going to have to file, but it might be something you receive. 1099 Ks are forms that third-party payment processors, which has visa like credit cards, American express, Venmo, Cash App, etc. Those processors have to send 1099Ks, for amounts paid to people for business income., So you don't have to fill out 1099 Ks, but you may receive it if you get paid above the limit that is set by the IRS via those third-party processors."
- Brittney Suttle on 1099Ks and when you will likely receive them and why.
"If you send a 1099 to someone that you shouldn't have, that's signaling to the IRS that they made more than they actually did. Again, this could cause a lot of headache for them because the IRS is going to come back and say we are applying this much more in taxes, fees, and penalties and all of this because you under-reported income. So if you catch that someone sent you a incorrect 1099, or you as the sender figure out that it was incorrectly sent or there's a mistake. You can always file a corrected form that will then get sent to the IRS, you also you provide it to the client and then it will get taken care of."
- Brittney Suttle, explaining what happens if you get sent an incorrect 1099 form or you sent out a form with a mistake.