Over 190 million Americans file their taxes electronically, making up over 80 percent of all tax filings in the U.S. If you’re someone who needs to file 1099 NEC forms, you have to make sure you’re doing it correctly.
But how do you file 100 NEC forms electronically? What are some key things to know when filing 1099 NEC online?
That’s what we’re here to look at today. Read on to learn more about what you need to know when filling out a 1099 NEC form.
What Is a Form 1099?
There are two different types of 1099: the Form 1099 MISC and the Form 1099 NEC.
The MISC is an information return that reports miscellaneous payments made out to vendors as well as report payments. The NEC mainly reports non-employee compensations paid out to contractors.
The NEC was introduced in recent years to pay specific contractors, whereas the MISC was used before to report all payments. Understand that 1099 can’t be used to report payments for W-2 employees.
What Does That Mean for E-Filing?
More and more employers are filing their taxes electronically, which the IRS thankfully supports on their site. This is a benefit for those who don’t have time to print out and mail their tax filings each year.
The IRS has a Filing Information Returns Electronically system, or FIRE, that allows business owners to file a variety of different tax forms. This includes 1099 forms, for which you need to cover a few specific steps.
How to File a 1099 NEC Electronically
Before you start trying to file your 1099, understand that you need a service provider or software to generate a 1099 form. You can’t scan a physical form as a PDF, unfortunately.
If you have someone e-filing on your behalf, you won’t really have to worry about this. If not, there are plenty of places you can go to generate or make a 1099 NEC form.
Once you have the form ready to go, you need to create a FIRE account on the IRS website. After you get your login information, you can navigate to the main menu and choose “Send Information Returns.”
You’ll enter your transmitter control code, or TCC, here along with your Taxpayer Identification Number. Choose the “Original File” option and upload your 1099 document where noted.
Understand that these instructions may very well change over time. The IRS often changes up the steps or the overall filing process, so keep that in mind when filing your 1099s.
After you’re done with your first form, you’ll likely be prompted to either exit or file more forms.
You should be getting a file status notification in your email in the next few days. The FIRE account also keeps track of your filing status.
Filing a 1099-NEC Form the Right Way
Getting a 1099-NEC form and filing one can be daunting if you’ve never done it before.You should get the right assistance to file 1099-NEC forms the right way and make sure you’ve got everything in order for the next tax season!