1099-nec exceptions

There are 11 exceptions listed by the IRS that are not to be filed using 1099-NEC. The renewed 1099-NEC and accompanying 1099-MISC form changes may make your 2020 tax year filing a bit different than past years. We’ve discussed the dos and don’ts of filing the 1099-NEC as well as federal and state filing, and now let’s talk about some of the exceptions to the 1099-NEC, according to the IRS. Some payments, payouts, and compensation will not be reported on the 1099-NEC. Payment Exceptions to 1099-NEC Though many payments like contract work, fees paid to attorneys, and other payments and merchandise transactions between two professionals are recorded on the 1099-NEC, there are quite a few exceptions. Payment exceptions include: Payments for merchandise, telegrams, telephone, freight, storage and similar items  Rent payments to property managers and/or real estate agents. Note: these rent payments must, however, be reported on the 1099-MISC by the agent or manager. Payments to a tax-exempt organization, which also includes tax-exempt trusts: IRAs, HSAs, Archer MSAs, Coverdell ESAs, and ABLE (529A) accounts.  Any payments made to or for homeowners from the HFA Hardest Hit Fund or similar state programs. Compensation Exceptions to 1099-NEC 1099-NEC exceptions also include some forms of compensation. Per the IRS, there are 1099-NEC exceptions for “compensation for injuries or sickness by the Department of Justice as a public safety officer disability or survivor's benefit, or under a state program that provides benefits for surviving dependents of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty.” Compensation for wrongful incarceration (regardless of criminal offense) which ended in a conviction under federal or state law are also exempt from form 1099-NEC filing. Wage Exceptions to 1099-NEC Wages paid to employees are another exception to form 1099-NEC, …

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