Hey y’all! It’s that time of year again - tax season. And if you’re like me, you might have received a Form 1099-NEC in the mail. Don’t worry though, I’ve got you covered with all the info you need to know to file your taxes.
What is a Form 1099-NEC?
The Form 1099-NEC is a tax form used to report income that is not from an employer-employee relationship. This could include money earned from freelance work, contract work, or other types of self-employment. The 1099-NEC is generally given to individuals who are considered independent contractors or self-employed.
It’s important to note that the 1099-NEC is a relatively new form, introduced in 2020. Prior to that, non-employee compensation was reported on Form 1099-MISC. If you received a 1099-MISC in the past and now received a 1099-NEC, make sure to report the income accordingly.
Reporting Income from a 1099-NEC
When reporting income from a 1099-NEC, it’s important to understand the differences between being an employee and being an independent contractor or self-employed. If you are an employee, your employer will withhold taxes from your paycheck and issue you a W-2 at the end of the year. However, if you are an independent contractor or self-employed, you are responsible for paying your own taxes and will receive a 1099-NEC instead of a W-2.
When filing your taxes, you will need to report the income from Form 1099-NEC on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). You will also need to pay self-employment taxes on this income. Self-employment taxes consist of Social Security and Medicare taxes, which are typically withheld by an employer if you are an employee. However, since you are self-employed, you are responsible for paying both the employer and employee portion of these taxes.
Deadlines for Filing
The deadline for filing Form 1099-NEC is January 31st, so make sure to keep an eye out for any forms in the mail. You will also receive a copy of the form for your personal records.
If you need more time to file, you can file for an extension using Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return). This will give you an additional 6 months to file your tax return. However, keep in mind that an extension only applies to the filing of your tax return, not the payment of any taxes owed. If you owe taxes, you will still need to pay them by the original due date to avoid penalties and interest.
Final Thoughts
Filing taxes can be stressful, but understanding the process and staying organized can make it a lot easier. If you received a 1099-NEC, be sure to report the income on your tax return and pay any self-employment taxes owed. And if you need help, don’t hesitate to consult a tax professional.
That’s it for now, folks. Happy tax season!
