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Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

I paid them more than $600, I am a Residential Contractor, and these payments where made for my business.
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5 Replies
DaveF1006
Expert Alumni

Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

Yes, you will need to issue a 1099-NEC for each contractor you paid more than $600. According to this IRS link, the deadline to send these to your contractors is 02/01. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions. 

You may file after the filing deadline but there are penalties for submitting after the deadline. Those penalties are listed here.

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Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

I already sent 1099-NEC to my contractor prior to Feb 01, 2022, but the question is do I have to efile this form to IRS prior to my return (April)?

 

Thank you

DaveF1006
Expert Alumni

Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

Yes, the 1099-NEC should have been efiled by Jan 31. Do this as soon as possible !!

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Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

Thank you for your response. I have finally found out how to send it to IRS.

Very disappointed TurboTax software does not have that feature included; need to do it through the IRS website.

One more questions though, somewhat related:

The receiver of the 1099-NEC may file this income (less than 10k) reported on the 1099-NEC form as a sole proprietor and file a schedule C, etc but it would pay social security taxes.

If she files it under the Personal Income section > Other Common Income, since the standard deductions are 12500, she would be liable for any taxes. This is very confusing to me.

How one determines the income is a business income vs Other Common income?

To be clearer, the receiver is my daughter, full time student, and she helped me do advertising. This was something she helped me during the covid period, and I paid her regularly.

Thank you in advance for the advise.

Cynthiad66
Expert Alumni

Do I need to send contractors who worked for me as non-employees a 1099-NEC? When is the deadline?

You'll use the amount in Box 1 on your Form(s) 1099-NEC to report your self-employment income. Instead of putting this information directly on Form 1040, you'll report it on Schedule C.

 

She will most likely, only pay social security on the net income and is still entitled to the $12,500 standard deduction.  She will not have any taxable income due to the standard deduction but social security is due for self employment income.

 

However, if you had issued a W-2 to your daughter, Your child can earn a maximum of $12,550 without owing income tax*. If you are a sole proprietor or have a partnership with your spouse and your child is age 17 or younger, the IRS says you don't need to pay Social Security or Medicare, or FUTA (unemployment) tax on their wages

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