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What is nonemployee compensation and when is it reportable on a 1099-MISC form?

Nonemployee compensation is a payment for services to a company or a person that is not an employee.

The IRS says that nonemployee compensation is generally reportable on a 1099-NEC form when:

  • You made the payment to someone who is not your employee.
  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
  • You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
  • You made payments to the payee of at least $600 during the year.

1099-NEC, Box 1. Nonemployee Compensation

Enter nonemployee compensation (NEC) of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66.

For additional information see the Instructions for Form 1099-MISC