Form 1099-NEC Instructions for
2023 Tax Year

Form 1099-NEC contains 7 boxes, and each box has its own purpose.

Basic information

When filing a 1099 form, the first step is to enter the basic information about the payer and the recipient. You must provide the following information about the payer

and recipient.

• Payer information:

  

  Enter the payer’s name, address, and telephone number.

• Taxpayer Identification Number:

  When filing Form 1099-NEC, it’s mandatory to enter the nine-digits of the payer’s EIN/SSN in the
  respective field

• Recipient Information:

  Enter the recipient’s name and valid address associated with recipient’s details.

• Recipient’s TIN:

  enter the nine-digits of the recipient’s EIN/SSN in the respective field

  

• Account Number

  You need to enter an account number when you file more than one form of 1099-NEC for the recipient. The account number must also be provided when you check the box of FATCA filing requirements. It’s also encouraged by the IRS to designate an account number for every Form 1099-NEC you file.

  

• 2nd TIN not

  If the payee provided an incorrect TIN and the IRS has notified the payer twice within 3 calendar years, check this box so that IRS will not send any notice regarding this account.

  

Provide Tax return information

• This part of the field involves the following information about Non-employee compensation, Federal income tax, and state income reported in the
  Form 1099-NEC

  

• Box 1 - Nonemployee compensation

  In this field, you enter the Nonemployee compensation, which includes the following payment types to contractors:

  • Fees
  • Commissions
  • Prizes
  • Awards
  • Other forms of compensation for services

  If you have paid any workers $600 or more in nonemployee compensation, fill out
  Form 1099-NEC

• Box 4 - Federal Income Tax Withheld:

  Here you are supposed to enter the Federal income tax withheld, i.e., backup withholding. If a person didn’t furnish their TIN, the reported payment in Box 1 would be withheld.

• Box 5 - 7 - State income tax reporting:

  • Box 5 - State tax withheld

    If the state tax is applicable in your state, enter the state tax withholdings. Payments can be reported for up to 2 states.

  • Box 6 - State/Payer’s state no

    Here provide the abbreviated form of the states and state identification number
    of the payer.

  • Box 7 - State income

    In this field, enter the amount of the state payment