As far as IRS reporting is concerned, it is necessary to use the right form in order to remain compliant and not to face fines. There are two types of forms that are widely used, namely, Form 1099-NEC vs 1099-INT, which are used in different ways. Knowing the form to be used in your case guarantees proper and correct filing.
In Form1099Online.com, the e-filing solution approved by the IRS, it is easy to submit the specific 1099 forms and do it correctly and safely.
Table of Contents
What Is Form 1099-NEC?
The payments to the independent contractors, freelancers and other nonemployees are reported on the form 1099-NEC (Nonemployee Compensation).
On the form you will be required to fill 1099-NEC in case you paid a sum of 600 or above to an individual or business (not an employee) in the tax year in question as a result of services provided to you in the course of your trade or business.
Common recipients include:
- Independent contractors and freelancers.
- Attorneys
- Vendors who were in business remunerated professional services.
It is mandatory to report even the payment that is presented to an individual, who happens to be a corporation, e.g., legal fee.
- IRS Deadline: January 31
- Reported on: Box 1 of Form 1099-NEC
- How to Report on Tax Return: Form 1099-NEC is normally used to record the income on Schedule C of Form 1040 as business income. This is subject to the income and self-employment tax.
What Is Form 1099-INT?
Interest income received or paid in the course of the year is reported on Form 1099-INT (Interest Income).
You will be required to complete Form 1099-INT in case you paid 10 or more in interest to an individual during a given tax year. In some forms of interest (such as trade or business interest) the limit is raised to 600.
Typical sources include:
- Bank savings and fixed deposits.
- Bonds and loans
- Interest on late payment or escrow accounts.
- IRS Deadline: January 31
- Reporters on: Box 1 (interest) or Box 3 (U.S. obligations) of Form 1099-INT.
- How to Report on Tax Return: The interest income provided on 1099-INT is usually provided on Form 1040, line 2b, or on Schedule B with multiple payers or substantial interest reported.
Quick Comparison: 1099-NEC vs. 1099-INT
| Feature | Form 1099-NEC | Form 1099-INT |
| Type of Income | Nonemployee compensation | Interest income |
| Reporting Threshold | $600 or more | $10 or more ($600 for specific cases) |
| Common Sources | Contractor or freelance payments | Bank and loan interest |
| Used By | Businesses and organizations | Financial institutions and payers of interest |
| IRS Deadline | January 31 | January 31 |
| Reporting Box | Box 1 | Box 1 (interest), Box 3 (U.S. obligations) |
Common Mistakes to Avoid
Making the incorrect filing: Do not make service fee or contractor payments reporting on 1099-INT. Enter 1099-NEC only in cases of services and 1099-INT only in the case of interest income.
Goods or rent less than 1099-NEC: Report using alternative 1099 forms (such as 1099-MISC).
Exempt backup withholding: back up withholding is to be ignored–unless one is being deducting the payment in which case one reports the amount of federal backup withholding.
Why File with Form1099Online.com
Form1099Online.com being an IRS approved e-filing company, guarantees that your 1099s are submitted correctly and within the specified time. Your 1099-K filings can be organized in a single platform with error prevention, immediate confirmation and safe data processing-fast, simple and compliant.
Enter your 1099-NEC or 1099-INT on Form1099Online.com and streamline your IRS reporting.