Tax Hub

The 1099 rules for types of items to report for 2021 on Form 1099-MISC and 1099-NEC per IRS Instructions generally apply to income payments of at least $600 and backup withholding of federal and state income taxes.

You want to integrate as seamlessly as possible with existing accounting and ERP systems. However there are many key steps along the supplier payment process that still require significant manual effort beyond sending out payment instructions to the transfer API for bank, ACH, and wire services.

Businesses use W-9 forms submitted by some U.S. suppliers and independent contractors to complete IRS forms 1099-NEC and 1099-MISC. W-9 forms are also required for other transactions besides reporting self-employed contractor income on 1099-NEC or 1099-MISC.

Form 1099-NEC is a new form issued by the IRS beginning with the tax year 2020. In a prior year, non-employee compensation was reported on Form 1099-MISC. IRS Form 1099-MISC was redesigned to remove non-employee compensation but is still used to report other Miscellaneous Information, certain miscellaneous income payments, and any backup withholding of federal income tax. 

W-8BEN-E is an important tax document which allows businesses operating outside of the U.S. to claim tax exemption on U.S.-sourced income.  The official document title is Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

The difference between IRS Form 1099-NEC and Form 1099-MISC information returns is that Form 1099-NEC is used by payers to report nonemployee compensation and follow backup withholding rules. Form 1099-MISC is used by payers to report information on other types of miscellaneous nonemployee payments.