2020 Draft 1099-MISC and NEC Instructions Released

The IRS has released 2020 draft joint 1099-MISC and NEC instructions.  Changes to instructions are highlighted below:

  • 1099-NEC due January 31, 1099-MISC due March 31 (electronic);
  • Specified changes to the 1099-MISC as noted in the instructions’ preamble:
    • There is a checkbox in box 7 to indicate direct sales of $5,000 or more;
    • Crop insurance proceeds now reported in box 9 (was box 10);
    • Gross proceeds to attorneys now reported in box 10 (was box 14);
    • Section 409A deferrals reported in box 12 (was box 15A);
    • Nonqualified deferred compensation reported in box 14 (new reporting obligation);
    • State information now reported in boxes 15-17 (was boxes 16-18);
  • Information previously reported in box 7 of the 1099-MISC as non-employee compensation is now reportable in box 1 of the 1099-NEC;
    • Payments for termination of self-employed insurance salesmen remains reportable in box 3 of the 1099-MISC, not the NEC;
  • MISC box changes:
    • Prizes and awards for non-employees, non-contractors now reportable in box 3;
    • New box 5: fish proceeds (as distinct from cash sales for fish);
    • New box 6: medical and health care payments ($600 reporting threshold);
    • Payments to attorneys now reported in  box 10 (was box 14) ($600 threshold);
    • Section 409A deferrals now reported in box 12 (was box 15A) ($600 threshold);
    • New box 14-Nonqualified deferred compensation (previously included in box 7) (also included in box 1 of the NEC);
  • Notes on the new form 1099-NEC:
    • Box 1 reports Non-employee compensation;
    • Boxes 2 and 3 reserved, no present use;
    • Note the draft 2020 form 1099-NEC has a checkbox for direct sales of consumer products to a buyer, this will be removed from the final form;
    • Box 4 reports federal withholding.

To review the draft instructions, please follow this link.

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Author

Jesse Rooney

Jesse Rooney is regulatory counsel for Sovos. His research focuses on tax information reporting. He is a member of the Massachusetts bar.
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