Form 1099-NEC 2024 Checklist
Purpose
Form 1099-NEC reports nonemployee compensation paid during the 2024 calendar year. This form was introduced in 2020 to separate nonemployee compensation reporting from Form 1099-MISC. Filers must verify that the recipient taxpayer identification numbers (TINs) match IRS records to avoid backup withholding requirements.
Filing Steps
Step 1: Verify the Recipient’s Taxpayer Identification Number
Obtain and verify the recipient’s TIN using Form W-9. The TIN must match the recipient’s Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN), or Employer Identification Number (EIN) on file. Report the complete TIN to the IRS on Copy A. On recipient copies (Copy B, Copy 1, Copy 2), you may truncate the TIN to show only the last four digits for privacy protection.
Step 2: Complete Box 1 (Nonemployee Compensation)
Enter all payments of $600 or more made for services performed by nonemployees during 2024. This includes payments to independent contractors, freelancers, and other service providers. Report amounts that constitute self-employment income. Do not report employee wages (use Form W-2 instead) or payments made with credit cards or payment cards (these are reported on Form 1099-K by the payment settlement entity).
Step 3: Complete Box 2 (Direct Sales Indicator)
Check Box 2 only if you made direct sales of consumer products totaling $5,000 or more to the recipient for resale during 2024. This applies to sales made on a buy-sell, deposit-commission, or similar basis. Do not enter a dollar amount in this box—only check it if the $5,000 threshold is met. Alternatively, you may report this information in Box 7 of Form 1099-MISC instead of using Form 1099-NEC Box 2.
Step 4: Complete Box 3 (Excess Golden Parachute Payments)
For tax year 2025 and later (using the April 2025 form revision), report excess golden parachute payments in Box 3. These are compensation payments related to a change in corporate ownership or control that exceed three times the individual’s average annual compensation. For tax year 2024 filings using the January 2024 form revision, Box 3 was reserved for future use and should have been left blank.
Step 5: Enter Federal Income Tax Withheld in Box 4
Report federal income tax withheld in Box 4 only if backup withholding was required because the recipient failed to furnish a valid TIN or certification on Form W-9. Exclude voluntary federal income tax withholding agreed upon at the recipient’s request. Backup withholding applies when recipients do not provide proper TIN certification or when the IRS notifies you to begin backup withholding.
Step 6: Complete State Tax Information (Boxes 5–7)
Enter state income tax withheld in Box 5 if applicable. In Box 6, enter the two-letter state abbreviation for the state where income tax was withheld. In Box 7, enter your state identification number as assigned by that state’s tax agency. If you withheld taxes for multiple states, you may need to prepare separate forms for each state or consult your state’s specific reporting requirements.
Step 7: Prepare Copy A for IRS Filing
Use the official scannable red-ink version of Copy A when filing by paper. Do not download and print Copy A from the IRS website for submission to the IRS, as the online version is not scannable and may result in penalties. You must order official printed forms or file electronically. The scannable format requirement ensures proper processing by IRS optical character recognition equipment.
Step 8: Prepare Copies for Recipients and State Agencies
Assemble the appropriate copies for distribution. Copy B goes to the recipient for their tax return filing. Copy 1 goes to the state tax department (if your state requires it). Copy 2 goes to the recipient for their state tax return filing. Ensure all copies contain identical information. You may use the fillable PDF versions available on IRS.gov for furnishing copies to recipients.
Step 9: Determine Your Filing Method
If you are filing 10 or more information returns in aggregate (counting all Form 1099 types, Forms W-2G, 5498, etc.), you must file electronically. This is a mandatory requirement effective for returns filed on or after January 1, 2024. The previous threshold of 250 returns was lowered to 10 returns by Treasury Decision 9972. If you file fewer than 10 returns total, you may choose to file on paper or electronically.
Step 10: Submit Forms to the IRS by the Deadline
File Form 1099-NEC with the IRS by January 31, 2025, whether filing on paper or electronically. This applies to all 2024 tax year Form 1099-NEC filings, including those reporting direct sales in Box 2. If filing on paper, submit Copy A with Form 1096 (Annual Summary and Transmittal) to the appropriate IRS Submission Processing Center. If filing electronically, use the Information Returns Intake System (IRIS) or another approved e-filing method. Form 1096 is not required for electronic filing.
Step 11: Furnish Copy B to Recipients
Provide Copy B to each recipient by January 31, 2025. This deadline applies regardless of whether the recipient is a U.S. person or nonresident alien, though special treaty-based reporting deadlines may apply in certain international situations. You may furnish statements electronically if recipients consent to electronic delivery. If January 31 falls on a weekend or a legal holiday, the deadline is extended to the next business day.
Step 12: Correct Errors Using Proper Procedures
If you discover an error after filing, correct it as soon as possible. For paper corrections, prepare a new Form 1099-NEC with the correct information and check the CORRECTED box at the top of the form. Prepare a new Form 1096 to transmit the corrected form. File the corrected Copy A with Form 1096 to the IRS—do not include a copy of the original incorrect return. Furnish a corrected statement to the recipient. Do not check the VOID box when filing corrections, as this causes IRS scanning equipment to ignore the form. For electronic corrections, follow procedures in IRS Publication 1220 (FIRE system), Publication 5718 (IRIS Application to Application), or Publication 5717 (IRS Portal system).
Step 13: Use the Optional Account Number Field
The account number field on Form 1099-NEC is optional but recommended if you maintain multiple accounts for a single recipient and are filing more than one form for that recipient. Using account numbers helps you match forms to your internal recordkeeping systems. The account number is also required if you check the FATCA filing requirement checkbox (not applicable to Form 1099-NEC under normal circumstances, but relevant for certain international reporting).
Step 14: Understand When Not to File Form 1099-NEC
Do not file Form 1099-NEC for payments to corporations, except for payments to law firms and medical/health care providers. Do not report payments for merchandise, telegrams, telephone, freight, or storage. Do not report wages paid to employees (use Form W-2). Do not report payments made with credit cards or payment cards (the payment settlement entity reports these on Form 1099-K). Do not report payments to tax-exempt organizations, government entities, or foreign governments.
Step 15: Maintain Records and Monitor for IRS Notices
Keep copies of all filed forms and supporting documentation for a minimum of three years. Monitor for IRS notices regarding incorrect TINs. If you receive a “B Notice” from the IRS indicating a TIN mismatch, send a solicitation to the recipient requesting correct information. You may check the “2nd TIN Not.” box on future forms if you receive two IRS notices within three calendar years about the same account (but not if both notices were received in the same year or related to the same filing year). Consider using the IRS TIN Matching System to verify TINs before filing.
Key 2024–2025 Updates
The April 2025 form revision supersedes the January 2024 version and includes important changes. Box 3, previously reserved for future use, now reports excess golden parachute payments starting with the 2025 tax year. This reporting requirement has been moved from Form 1099-MISC, Box 14, to Form 1099-NEC, Box 3.
The electronic filing threshold decreased from 250 to 10 information returns (aggregate count) for returns filed on or after January 1, 2024. This mandatory requirement applies whether you file original returns, corrected returns, or a combination of both.
A scannable format requires strict adherence to specific requirements. The IRS emphasizes that filers must not print Copy A from downloaded PDF files, as these are not scannable. Non-scannable submissions may result in penalties—order official pre-printed forms or file electronically to ensure compliance with regulations.
TIN truncation protocols apply uniformly across all 2024 and 2025 filings. Show only the last four digits of the recipient’s TIN on copies furnished to recipients (Copy B, Copy 1, Copy 2), but report the complete TIN to the IRS on Copy A.
Backup withholding in Box 4 applies only when recipients fail to provide a valid Form W-9 certification. This is not voluntary withholding. Recipients must report backup withholding as tax withheld on their Form 1040, 1040-SR, or 1040-NR.
State income tax reporting clarity has improved. Filers must obtain current state identification numbers and apply the correct two-letter state abbreviations. If a recipient earned income in multiple states, you may need to issue separate forms showing the income and withholding for each state, depending on state-specific requirements.
Important Reminders
Form 1099-NEC must be filed if you paid $600 or more to a nonemployee for services during the calendar year. This threshold applies to each recipient individually. Even if you paid someone $595 in 2024, you are not required to file Form 1099-NEC for that recipient.
The form serves a critical tax compliance function by helping the IRS match payments reported by payers with income reported by recipients on their tax returns. Accuracy is essential. Incorrect TINs trigger backup withholding requirements and may subject you to penalties.
Trade or business reporting applies to these forms. You must file Form 1099-NEC only for payments made in the course of your trade or business. Personal expenses are not reportable. However, nonprofit organizations are considered engaged in a trade or business and must file these forms.
General Instructions for Certain Information Returns provides comprehensive guidance applicable to all Form 1099 types. These general instructions cover topics including who must file, when and where to file, electronic reporting requirements, corrected and void returns, statements to recipients, TIN requirements, backup withholding rules, and penalties. Always consult both the specific Form 1099-NEC instructions and the general instructions for complete guidance.
Filing deadlines are strict and carry significant penalties for late filing. January 31 serves as a unified deadline for Form 1099-NEC—both for filing with the IRS and furnishing statements to recipients. This differs from Form 1099-MISC, which has a February 28 paper filing deadline (March 31 if filing electronically) with the IRS, though certain boxes require January 31 filing.
By following this checklist and staying current with IRS updates, you can ensure accurate and timely Form 1099-NEC reporting that meets all federal requirements.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
