1099 Filing Information:
1099-NEC is a new form, as of the 2020 tax reporting year that has replaced some of the functions of 1099-MISC.
The IRS requires you to report information about people who perform work for the church but are not on the payroll. This involves filling out Form 1099-NEC: Nonemployee Compensation.
Unlike the case for employees, employers generally do not have to withhold or pay any taxes on payments to independent contractors. These individuals keep track of their own tax obligations, oftentimes making quarterly estimated tax payments to the government. They fill out appropriate forms dealing with their earnings as part of their annual personal tax return.
While smart independent contractors meticulously keep their own records as to who paid them what, the law still requires official reporting. Thus, an employer must file a 1099-NEC for each person who is not an employee but to whom it paid at least $600 during the course of a year for services performed.
The penalties for failing to file 1099-NEC forms correctly and on time aren’t chump change anymore. Beginning with forms filed next year, the penalty for failing to file correctly is $50. That’s only if you manage to file the correct forms within 30 days of your mistake – penalties increase the longer you wait.
So now is the time to make sure you know the 1099-NEC facts and stay in good graces with the IRS.