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Financial Services

Processing of 1099-MISC and 1099-NEC

Processing of 1099-MISC and 1099-NEC

The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payment​s made to nonemployee individuals, such as independent contractors, during the calendar year.

1099-NEC vs. 1099-MISC Summary

Form 1099-NEC (Nonemployee Compensation)

Used to report payments of $600 or more made to independent contractors, consultants, or service providers who are not employees. This includes fees for services, honorariums, stipends, and speaker payments.

  • Applies to individuals, sole proprietors, and some LLCs.
  • Must have a completed W-9 on file.
  • Payments must be reported annually to the IRS.

Form 1099-MISC (Miscellaneous Information)

Used for other types of payments not related to services, such as:

  • Rent
  • Royalties
  • Prizes or awards
  • Certain legal settlements

Key Differences:

  • 1099-NEC = Services rendered (nonemployee compensation)
  • 1099-MISC = Non-service payments (like rent or awards)

All payments are reviewed for IRS reporting eligibility. Recipients may receive a 1099 form if total annual payments meet reporting thresholds.