What you need to know about reporting nonemployee compensation
For over 100 years, the IRS has looked for ways to get third parties to report nonemployee compensation payments. But that has become increasingly complicated, especially with the rise of the independent contractor workforce. Additionally, there are disparate federal and state reporting obligations, the thresholds for reporting requirements have lowered and there are other tax reporting requirement changes yet to happen.
Typically, when taxpayers are not W-2 workers, they receive their income from independent sources. This means that the taxpayer could receive a 1099-MISC, a 1099-NEC or a 1099-K (instead of the W-2 that full-time employees receive). Depending on what was paid and how it was paid will determine which of those forms the taxpayer receives.
How can a business stay compliant with all nonemployee withholding and reporting requirements? What determines the type(s) of form that individuals receive?
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What are the differences between Forms 1099-NEC, 1099-K and 1099-MISC?
The rise of the gig economy
Common reporting issues
Backup withholding enforcement
Tax and regulatory reporting compliance grows increasingly digital. Businesses of all sizes and across all industries are impacted. Disparate federal and state reporting obligations, lower thresholds for 1099 reporting and future tax reporting changes can all impact compliance requirements for companies. Once you understand the organizational costs associated with ever-changing tax reporting needs, it can help ensure proper management of delivering all necessary information to recipients, the IRS and states. Our white paper can help clarify the confusion and provide thorough explanation to what your business must do to maintain compliance.