![]() An independent contractor is a little less clear. The IRS assumes individuals working for an organization are employees unless it is proven otherwise. You probably already understand what an employee is. How do I determine who are Independent Contractors? ![]() The $600 also includes any parts or materials the contractor billed you for. An independent contractor is someone who is not your employee and has been paid over $600 throughout the year. The IRS recognizes as non-employee compensation monies paid for services performed by Independent Contractors. How can I get free 1099s? What is Non-employee Compensation? ![]() What else needs to be sent with the 1099s? What do I do to my chart of accounts for the 1099 changes? How do I know which contractors need to receive Form 1099 this year? Starting in 2020, the IRS now requires payments to independent contractors are shown on a new form 1099-NEC (non-employee compensation) instead of the 1099-MISC (miscellaneous). The 1099-Misc listed royalties, rents, and other miscellaneous items, but its most common use was for payments to independent contractors. In past years, if your organization paid a person for services who was NOT an employee, you may have needed to file a 1099-Misc for the total amount given over the year. Along with all the other changes we have dealt with in 2020, the IRS has also changed how organizations report the money paid to independent contractors, or as they prefer to label it, Non-employee Compensation.
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