2020... MORE CHANGES???
Thanksgiving is upon us. As we approach the Holidays, we focus on the happy moments ahead of us - especially in this weird 2020- but let me ask you, are you even considering having everything ready for year-end closing procedures and filings due early 2021?
The current year has brought a lot of changes to our everyday life; we have been submerged in a new way of living, interacting through ways that we did not use to and to make this year even more interesting, the IRS has decided to make changes to the well-known form 1099-MISC.
The IRS is bringing back to life form 1099-NEC; a form that hasn't been used since the early 1980s. The 1099-NEC brings the nonemployee compensation (formerly reported on Box 7 of the 1099-MISC) into the revived form along with separate boxes to report any federal and state withholding for the period. Meaning, starting in January 2021, companies will not be allowed to report nonemployee compensations in form 1099-MISC anymore. We anticipate this process to be more confusing and time-consuming for the average business owner, that is why we encourage you to plan ahead, please do not procrastinate!
The revived 1099-NEC will look like this...
IMPORTANT CONSIDERATION... If you are using Quickbooks as your accounting system (Desktop or Online), you will need to make some changes in your chart of accounts to file 1099-NEC and 1099-MISc as there is a limitation of 1 form per account. Thus, you will not be able to generate both 1099 forms from 1 account if that is your case.
It is extremely important to be prepared for year-end ahead of time to be able to file on time. The deadline is set to be February 01, 2021 (since Jan 31st, is a Sunday).
We understand this might seem a little overwhelming, if you need any help navigating this or any other related issue please check in with us and schedule a free session with our team of experts.
WELCOME TO YOU ADVISORY SERVICE HUB!