Starting with the tax year 2025, the IRS has updated the reporting requirements for excess golden parachute reporting payments. These payments are typically made to executives when a company undergoes a merger, acquisition, or significant change in ownership.
Previously, these payments were reported in Box 14 of Form 1099-MISC. Beginning with filings for 2025, they must now be reported in Box 3 of Form 1099-NEC. Box 14 on Form 1099-MISC is now reserved for future use.
Table of Contents
Key Details of the Change
Old Practice Before 2025
- Form used: 1099-MISC
- Reporting box: Box 14
- Applies to: Executives or other disqualified individuals receiving severance or termination payments triggered by corporate control changes
- Tax impact: Subject to a 20 percent excise tax under IRC Section 280G
New Requirement From Tax Year 2025
- Form used: 1099-NEC
- Reporting box: Box 3, designated for excess golden parachute payments
- Effective for: Returns filed in 2026 for the 2025 tax year
- Note: Box 14 on Form 1099-MISC should not be used for these payments
The IRS updated this rule to consolidate reporting for nonemployee compensation and related payments, creating clearer guidance for filers.
Implications for Tax Filers and Preparers
Form Updates
Use only the latest IRS-approved Form 1099-NEC released in April 2025 for reporting excess golden parachute payments. Older forms are no longer valid for this purpose.
Who Must File
Payers making excess golden parachute payments of $600 or more to nonemployees or disqualified individuals must report the payments in Box 3 of Form 1099-NEC.
Filing Deadline
For the 2025 tax year, the deadline to issue Form 1099-NEC is February 2, 2026. January 31 falls on a weekend, so the first business day after the weekend is used.
Recordkeeping and Preparation Tips
- Update payroll and tax systems to ensure the correct reporting box is used
- Review executive agreements, mergers, and acquisition documents for potential excess payments
- Prepare early to avoid errors and delays in submission
Reason for the Change
The IRS moved reporting of excess golden parachute payments to Form 1099-NEC to simplify filing for nonemployee compensation. This change provides clear guidance and improves compliance for both businesses and executives.
Stay Compliant with Form1099online.com
Form1099online.com is an IRS-authorized e-filing platform that makes reporting 1099 forms simple, accurate, and compliant. The platform supports the updated 2025 rules for reporting excess golden parachute payments on Form 1099-NEC.
Filing with Form1099online.com ensures your submissions meet IRS requirements and are completed on time.
Frequently Asked Questions
What are excess golden parachute payments?
These are large payments made to executives during mergers, acquisitions, or ownership changes. They are subject to a 20 percent excise tax under IRC Section 280G.
Which form should be used for 2025 payments?
Use Form 1099-NEC and report the payments in Box 3.
What happened to Box 14 on Form 1099-MISC?
Box 14 is now reserved for future use and should not be used for excess golden parachute payments.
When is the filing deadline for 2025 payments?
The deadline is February 2, 2026.
Where can I e-file the updated Form 1099-NEC?
You can file online securely with Form1099online.com, an IRS-authorized e-file provider.