1099 Forms Form 1099-NEC Instructions for 2023

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IRS Form 1099-NEC Instructions: Line-by-Line Explained

Form 1099-NEC is an information return that reports non-employee compensation to the IRS. Non-employee compensation includes:

  • Payments made to individuals not considered employees
  • Cash payments for fish purchased from someone in the trade or business of catching fish
  • Payments made to an attorney

How to Fill Out the 2022 Form 1099-NEC

Form 1099-NEC consists of 12 boxes (fields), including two checkboxes. Each box requires specific information related to the reporting. The following is a breakdown of each box on the IRS Form 1099-NEC and an explanation of how to complete each.

Sections For Entering Payer Information

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Complete the Payer Details section. This includes:

  • Name
  • Address
  • Contact phone number
  • Tax Identification Number (TIN)

Sections For Entering Recipient Information

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Complete the Recipient Details section. This includes:

  • TIN
  • Name
  • Street Address
  • City, State, Zip

Completing Boxes 1 to 7 on Form 1099-NEC

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In Boxes 1 to 7, the payer reports applicable payments and tax withheld from the recipient:

Box 1 – Non-Employee Compensation

Enter the non-employee compensation if payment is $600 or more for a calendar year.

Box 2 – Payer Made Direct Sales Totaling $5,000 or More

Mark an "X" in the checkbox if you have made sales of consumer products totaling $5,000 or more to a person for resale purposes, using a buy-sell, deposit-commission, or another commission basis. These sales are intended for resale by the buyer or another person anywhere other than in a permanent retail establishment. Do not enter a monetary value in this box. This was previously reported on Form 1099-MISC. Filers can report it in Form 1099-NEC Box 2 or Form 1099-MISC Box 7.

Box 3 – Reserved for Future Use

The IRS has left Box 3 blank for any additional information in the future.

Box 4 – Federal Income Tax Withheld

Enter the amount of tax withheld from the payments made to your recipient. This withheld amount is commonly known as backup withholding. The IRS mandates payers to withhold a specific percentage of payment from the recipient when they do not provide the correct TIN information to the payer.

Box 5 – State Tax Withheld

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Input the state tax withholding if applicable in your state. Each recipient can have two state payments.

Box 6 – State/Payer's State No

Enter your employer's state identification number and the abbreviated name of your state— for instance, TX– Texas, CA – California.

Box 7 – State Income

Enter the amount of the state payment for the corresponding state listed in Box 6.

Discover more about 1099-NEC State Filing Requirements.

What is the deadline for filing Form 1099-NEC with the IRS?

  • January 31st, 2023
    Recipient Copies/Paper/E-file

    Form 1099s must be distributed by the employer to the recipient on or before January 31st

Note: If the filing deadline lands on a Saturday, Sunday, or legal holiday, the due date will automatically be extended to the following business day.

Visit our deadlines article to learn more about Form 1099 due dates.

Most states also have a filing deadline of January 31st, but some may vary. View our state deadlines post to learn more about the state filing deadlines.

What are the different Form 1099 Copies?

Each Form 1099 has five different copies with their specific purpose:

Copy A

IRS copy for paper filing.

Copy 1

Filed with the State Tax Department.

Copy B

Recipient copy.

Copy 2

Recipient state copy used for state income tax reporting.

Copy C

Payer's copy for their records.

Get started with , and file your 1099 tax forms with federal/state and mail recipient copies from one place. BoomTax will never remove past years' filings, and you can continue to make corrections at any time, no matter the year. File my Now!

E-filing vs. Paper Filing

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Paper Filing

  • It can take weeks to hear a status update
  • Requires unique red ink form
  • Prone to human error
  • No expert to help with questions

Note: IRS recommends that payers utilize the e-file option over paper filing for faster processing.

Are you concerned about managing various copies of Form 1099-NEC? Switch to an e-filing solution and file your 1099-NEC with the IRS and state agencies in a few simple steps. You can also send recipient copies via postal mail and online access.

How to File Form 1099-NEC Electronically

To file your Form 1099-NEC electronically with the IRS and the necessary state agencies, use an IRS-authorized e-file provider that supports e-filing for all 1099, W2, Pay Data, and ACA Forms.

Import Your Form 1099-NEC Data

You can import your data as Excel, XML, or use files from popular payroll providers like QuickBooks, UKG, ADP, and many more.

Step-By-Step Wizard

We walk you through the process with no complicated jargon. You can also chat with us as you work on your filing for hands-on help.

E-File & Mail Employee Copies

Once your data is loaded, you can e-file and distribute employee copies in minutes.

What is the Penalty for Missing Form 1099 Deadline?

Failing to file Form 1099 by the deadline or meeting the deadline but providing incorrect recipient information can result in IRS penalties ranging from $60 to $630, depending on how late the form is submitted.

After the deadline, but within 30 days

$60 per form

After 31 days - August 1st

$120 per form

After August 1st, or not at all

$310 per form

Intentionally not filing

$630 per form

1099 penalties may be subject to the following:

  • Furnishing incorrect information on a return
  • Failure to provide the required information
  • Late filing of returns
  • Paper filing when required to file electronically (E-file 1099 if you have 10 or more information returns)

The IRS is accustomed to changing rules year-to-year, sometimes even in the middle of the current tax season! This is why having the most accurate information about the IRS requirements and deadlines for filing any Form 1099 is essential. Use reliable tax software to e-file your forms and stay updated on any changes in regulations or deadlines.

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