1. Filing with the IRS
Filing Copy A with the IRS is a crucial part of the tax filing process for both forms. There are two methods for filing Copy A:
- Electronic filing: This is the fastest way to get it done. You’ll use the IRS’ FIRE (Filing Information Returns Electronically) system, which allows you to submit your forms faster with fewer errors. If you use accounting software with payroll integrations like QuickBooks Payroll, you can e-file directly from your software.
- Paper filing: This is the slower option. You’ll submit your copies by mail to a specific address, depending on where your business is.
If you use accounting software or contractor payment services, they can likely file electronically for you.
2. Sending copies to the recipient
Next, you’ll send the recipient their copies—Copy B and Copy 2. With their consent, you can send the form electronically. Again, if you use software or a service, they can likely send these for you.
3. State filing requirements
State filing requirements for Forms 1099-MISC and 1099-NEC vary depending on the state. Some states require you to file these forms with the state, while others do not have such requirements.
States exempt from 1099 filing include Alaska, Florida, Illinois, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you are a business or independent contractor operating in these states, you do not have to submit 1099 forms to the state.
Filing requirements can change, so you’ll want to check with each state's tax authority for the most up-to-date information.
Best practices for Forms 1099-MISC or 1099-NEC
It’s easy to make mistakes on 1099 forms. One of the keys to remember is that you may need to file more than one or none at all. For 1099-MISC and 1099-NEC forms, this could look like this:
- 1099-MISC only: Reporting specific types of payments besides wages
- 1099-NEC only: Reporting nonemployee compensation
- Both forms: Paying an independent contractor over $600 and over $600 in rent
- Neither form: Only paying an independent contractor $300 for the year and not making any miscellaneous payments
If you do have to file one of these forms, ensure you adhere to filing deadlines and that all information is accurate. This includes the recipient’s taxpayer identification or Social Security number.
Find peace of mind come tax time
Remember, you may need to use both Forms 1099-MISC and 1099-NEC or multiples of each. Deciding on whether you need 1099-MISC vs. 1099-NEC forms starts with organization and efficient bookkeeping to eliminate the possibility of leaving one out.
For seasoned and startup business owners alike, there’s assistance available. Accounting software like QuickBooks Online can help you track contractors and fill and file out your forms.