The new Form 1099-NEC—which is actually an old form that hasn’t been in use since 1982—is used to report any compensation given to nonemployees by a company. The IRS has separated the reporting of payments to nonemployees from Form 1099-MISC and redesigned it for tax year 2020.

Employers will no longer report nonemployee compensation, such as payments to independent contractors, on Form 1099-MISC.

Form 1099-NEC

Beginning with tax year 2020, employers must use Form 1099-NEC to report nonemployee compensation. If the following four conditions are met, you must generally report a payment as nonemployee compensation:

1.  You made the payment to someone who is not your employee.
2.  You made the payment for services rendered in the course of your   trade or business (including government agencies and nonprofit   organizations).
3.  You made the payment to an individual, a partnership, an estate or, in some cases, a corporation.
4. You made payments to the payee of at least $600 during the year.

Common examples of nonemployee compensation include payments to independent contractors, fees paid for professional services such as of attorneys and accountants, and commissions paid to nonemployee salespersons that are subject to repayment but not repaid during the calendar year.

Employers are required to furnish Form 1099-NEC to the payee and file with the IRS by January 31 (February 1 in 2021, since January 31 falls on a Sunday).

Form 1099-MISC

According to the IRS, beginning with tax year 2020, you should file Form 1099-MISC for each person to whom you have paid the following in the course of your business during the year:

1. At least $10 in royalties or broker payments in lieu of dividends or tax-  exempt interest.
2. At least $600 in the following:
3. Rents.
4. Prizes and awards.
5. Other income payments.
6. Generally, cash from a notional principal contract to an individual, a partnership or an estate.
7. Any fishing boat proceeds.
8. Medical and health care payments.
9. Crop insurance proceeds.
10. Payments to an attorney.
11. Section 409A deferrals.
12. Nonqualified deferred compensation.

Employers must furnish the Form 1099-MISC to the recipient by January 31 and file with the IRS by February 28 (March 31 if filing electronically). For 2021, the due dates are February 1 to the recipient and March 1 to the IRS.