Tax Tip 2021-88: Businesses must report nonemployee compensation and backup withholding

IRS Tax Tips June 21, 2021
Useful Links: IRS.gov Help For Hurricane Victims News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News IRS Resources Compliance & Enforcement News Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media	Issue Number:  Tax Tip 2021-88 Businesses must report nonemployee compensation and backup withholding By law, business taxpayers who pay or receive nonemployee compensation of $600 or more must report these payments to the IRS. They do this using Form 1099-NEC, Nonemployee Compensation.   Generally, payers must file Form 1099-NEC by January 31. For 2021 tax returns. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.   Nonemployee compensation may be subject to backup withholding if a payee has not provided a Taxpayer Identification Number to the payer or the IRS notifies the payer that the payee provided a TIN that does not match their name in IRS records.   A TIN can be one of the following numbers: Social Security Employer identification Individual taxpayer identification Adoption taxpayer identification   What is backup withholding? Backup withholding can apply to most kinds of payments reported on Forms 1099 and W-2G. The person or business paying the taxpayer doesn't generally withhold taxes from certain payments; however, there are situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income The payer's requirement to withhold taxes from payments not otherwise subject to withholding is known as backup withholding. The current backup withholding tax rate is 24%.   More information: Instructions for Forms 1099-MISC and 1099-NEC General Instructions for Certain Information Returns Publication 15, (Circular E), Employer's Tax Guide   Share this tip on social media -- #IRSTaxTip: Businesses must report nonemployee compensation and backup withholding. https://go.usa.gov/x6mZt Back to Top         Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

 

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