Enter the total amount of money paid to the independent contractor or service provider. The total should represent all money paid in the tax year (calendar year).

The IRS asks if any consumer products was sold to someone on a commission basis for resale. For box 2, do the following:

1. Check the box with an “X” if you sold consumer products to someone on a commission basis (i.e., buy-sell, deposit-commission, or similar) for resale.
2. Only check this box if the total sales you made in this manner to that person amounted to $5,000 or more during the tax year.
3. Do not enter a specific dollar amount in this box. Just mark it with an “X” if the conditions above apply.^[3]

Enter if any Federal Income Tax was withheld from the contractor’s pay. If none was withheld, enter “0.”

Boxes 5-7 are not required for submitting to the IRS, but they are necessary for state entities that require 1099-NEC filings. In Box 5, Enter if any state income tax was withheld from the contractor’s pay. If none was withheld, enter “0.”^[4]

In box 6, enter the abbreviated name of the state (e.g., CA, TX, FL, NY) and the payer’s state identification number.

Enter the amount of the state payment for the state listed in Box 6.

On the left side of the 1099-NEC, a total of 6 boxes require information that identifies the payer and recipient, including:

• Payer information – name, full address, and phone number
• Payer’s TIN – taxpayer identification number
• Recipient’s TIN – normally an SSN/ITIN or EIN
• Recipient’s name – full name
• Recipient’s street address – number and street only
• Recipient’s remaining address – city/town, state/province, country, Zip/postal code

The recipient’s TIN must be entered in XXX-XX-XXXX (SSN or ITIN) or XX-XXXXXXX (EIN) format.^[5]

The account number field is generally provided for the payer’s reference and for internal recordkeeping. It is required if there are multiple accounts for a recipient who is receiving more than one 1099. Some reasons an account number would be used are:

• Multiple accounts – If payments are made to a payee for multiple service types or from different accounts in a company, an account number helps separate payments.
• Vendor identification – Some businesses use account numbers to identify their vendors in accounting/payment systems to maintain consistency

Most of the time, an account number will not be entered. If there is no account number, leave the field blank.^[6]

The payer should check the box only if they have received notices twice from the IRS within three calendar years that inform the payer that the recipient provided an incorrect TIN. If the payer receives two notices in the same calendar year, they should leave the box unchecked.^[7] You can verify someone’s TIN with the IRS’s TIN validation service.

In order to have to correct information to file the 1099-NEC, the payer must first collect a W9 form from the service provider. The W9 provides information needed to fill out the form, such as:

• Name/business name
• Mailing address
• SSN/ITIN or EIN

Contractors who received payments of $600 or more are eligible to receive a 1099-NEC. Standard employees receive a W-2 form.

Forms can be obtained or filled out in the following ways:

• Ordering copies from the IRS
• Participating in the IRS’s IRIS eFile program
• Using software to auto-submit

If you’re submitting more than ten 1099 forms, they must be submitted electronically, whether through the IRIS program or another eFile provider.

If filing by paper, Copy A, along with IRS Transmittal Form 1096, must be filed with the IRS. Both forms must be official versions printed by the IRS. Do not use printed pdf copies for IRS filing.^[8] You may, however, use printed PDF copies to notify recipients and for your own records (Copy B and C).

The deadline for paper filing is January 31st. The mailing address for the 2023 tax year for Form 1099-NEC will depend on the home state of the filer.

Copy B must be furnished to each payee by January 31st of each year. Use the address listed on the W9 form to send Copy B to the payee.

Keep Copy C in business records for at least four years. The IRS may request the form in the event of an audit or investigation.

Some states require a Copy 1 of 1099-NEC. Certain states are in CF/SF, the Combined Federal / State Filing program, and are automatically forwarded 1099s when submitted to the IRS.

The states currently in the CF/SF program are: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, and Wisconsin.^[9]

States where no 1099-NEC is required to be filed: Alaska, Florida, Illinois, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming.

If you live in a different state than those mentioned, you should review the Quickbooks state-by-state 1099 filing portal list.