Reporting Nonemployee Compensation and Backup Withholding

IRS is reminding businesses, payroll professionals and other payers to use Form 1099-NEC, Nonemployee Compensation, to report nonemployee compensation of $600 or more paid to a payee. Generally, payers must file Form 1099-NEC by Monday, January 31 for tax year 2021.
A payer may request a 30-day extension to file Form 1099-NEC by filing Form 8809, Application for Extension of Time to File Information Returns. IRS does not grant the extension automatically. The payer must meet one of the criteria listed on line 7 of this form.
Also, nonemployee compensation may be subject to backup withholding at a rate of 24 percent if:

  • A payee has not yet provided a taxpayer identification number (TIN) to the payer at the time the compensation is paid to the payee; or
  • IRS notifies the payer that the TIN provided was incorrect.
If a payer must backup withhold, they must deposit the withholding with IRS. Learn more here