How To File 1099 NEC Electronically
Reporting your financial information to the Inland Revenue Service accurately is one of the most important things you must do. One of the forms you may be required to complete is a 1099-nec form.
While it is indeed possible to fill out and file this form via mail, a more popular and simpler way of doing this is electronically.
However, there are a number of ways to file a 1099-nec form electronically, so we’ve decided to write this handy guide to explain how to complete and file this form in all the different electronic ways.
So, read on for more.
Also read: How To Calculate Tax On 1099-MISC Income?
Why File A 1099- Nec Electronically
As we said, while it is indeed possible to file your 1099- nec form via mail, electronic filing has become much more popular and it is much simpler.
The reasons for this are numerous. Here are just a few:
It’s much quicker to file your 1099- nec form electronically. Not only does this mean it’s quicker for you to complete, but it’s much quicker to send as it goes directly to the department that you need.
Peace Of Mind
When it comes to your finances, you always want peace of mind - especially when it comes to the Inland Revenue Service.
Sending your 1099-nec form electronically means that you can guarantee it has been sent and delivered, but you can also prove this with digital documentation - normally in the form of an email confirmation.
Upon completing your 1099-nec form, you’ll be provided with a whole host of helpful tips and information. You can also contact someone to help whilst you’re filling it out, should you need to.
If you choose to file your 1099-nec form via mail, you may need to pay for postage and maybe even an additional fee. Doing this electronically removes any need for this.
Methods Of Filing Electronically
Filing your 1099-nec form electronically can be done a number of ways. Let’s take a look at them in more detail.
Filing Information Returns Electronically
The FIRE system, or Filing Information Returns Electronically, is the most common way of filing your 1099-nec form electronically now.
It’s a free service offered by the Inland Revenue Service and it’s pretty straightforward. All you’ll need to do is register an account online, then fill out the following information:
Payer information (name, tax identification number, address)
Payee information (same detail requirements as above)
Federal information (any non-employee payments, federal tax withheld)
If applicable, state filing information (payer’s state number and tax withheld)
You can do the FIRE system for free if you go through the correct channels, but there are a number of services that will work on your behalf. We’ll look at these next.
Third Party Services
There are many third parties that you can find online that will file your 1099- nec form for you, but they will usually request a fee for their services.
However, these services are only recommended if you can trust them. If you see something that looks suspicious or too good to be true, you should avoid them. Remember, you will be handing over very delicate personal information which can be hijacked and used in fraud.
You can ask the Inland Revenue Service for their trusted third parties if you wish to go down this route.
These services are known as e-filing partners. One of the most trusted is Xero that can help you complete and file your 1099-nec form, you’ll just need to register with them and follow their instructions.
Also read: Who Gets A Form 1099-MISC?
Do I Have To File A 1099- Nec Form?
If you are a business and you have made a payment to someone who is not your employee, for services that totalled $600 or more over one calendar year - then yes, you do have to file a 1099- nec form.
There are a few exceptions though. If you made payments via credit or debit services, or third parties such as PayPal, they will report these payments directly, so you will not have to worry about that too much.
If you’re asking if you have to file a 1099- nec form electronically, then no - of course not! If you’re still happy to do it via mail, you’ll also need to fill out a 1096 form which acts as a “cover letter”.
This is then attached to your application and sent to the Inland Revenue Service.
Also read: What Is A 1099 Misc Form?
What If I’m The Payee?
If you have received payments by a business that is not your employer that totals more than $600 over one calendar year, you still do not have to file a 1099- nec form.
It is the business’s responsibility to ensure they have completed this form and sent you a copy. If you have not received this copy before January 31, then you should get into contact with them.
You are still required to report your income and earnings though, so ensure you have done that correctly - regardless of whether the business has sent you a copy of the 1099-nec form.
Remember, you will be asked by the business to provide your details such as your tax identification number, name and address. Without this information, they will be unable (or unlikely at least) to be able to fill out the form correctly.
As a result, you will not be able to receive a copy.
Also read: How To File A 1099-MISC Form?
The Bottom Line
Completing and filing your 1099- nec form electronically is without question more simple, cheaper and easier than doing so via mail.
There is also more protection and guarantees doing so with this method. However, the choice is ultimately up to you. Either way you choose to do so, ensure you are filing the form correctly and accurately.
We hope this guide has been useful to you and cleared up any questions you had about electronic filing of this form!
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