Form 1099-NEC is a new development for the tax year 2020, and it has caused stress and confusion for tax professionals and business owners alike. In a year full of upheaval, this has been one more change to adapt to.
Since Form 1099-NEC is not included in the Combined Federal and State Filing program, or CS/SF, this has created confusion with state filing. Here at TaxBandits, our team is getting many questions as year-end filing ramps up.
To help answer these questions, we are bringing you a quick guide to help you determine whether or not you need to file Form 1099-NEC with your state agency.
Background Information on Form 1099-NEC
Before we get started with state filing requirements, let’s talk about the purpose of Form 1099-NEC. This form was originally created in the 1980s, but it has been reactivated for Tax Year 2020 and beyond. Its sole purpose is to report non-employee compensation. This form will replace Form 1099-MISC, box 7, where this information has been reported in the past.
If you have employed an independent contractor and paid them $600 or more, you are required by the IRS to file a Form 1099-NEC for them and furnish them with a copy.
Some states require the filing of 1099-NEC, while others do not, here is what you need to know.
Which states don’t require the filing of Form 1099-NEC?
The following states do not require you to file Form 1099-NEC:
Which states require the filing of Form 1099-NEC?
Listed below are the filing requirements for all states based on the information provided by their Departments of Revenue. For more information on each, simply follow the link to their state page.
The deadline for filing Form 1099-NEC is January 31, 2021, unless otherwise noted. Please note that since the 31st falls over the weekend, these forms are due to the IRS and state on February 1, 2021.
The State of Connecticut requires the filing of Form 1099-NEC with the Connecticut Department of Revenue if the payments relate to service performed partially or completely within the state, even if there was no state income tax withholding.
File Form 1099-NEC with the Iowa Department of Revenue and Finance if there was a state withholding. If there is no state withholding, be sure to have the form available for the state upon their request.