Glossary
Payroll

1099‑NEC

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

1099-NEC is an IRS form used by organizations to report payments of $600 or more to non-employees, such as contractors or freelancers.
Form 1099-NEC is an IRS tax form used to report payments of $600 or more made to non-employees, such as independent contractors, freelancers, or vendors, for services rendered during the year. Organizations, including nonprofits, must issue a 1099-NEC to each qualifying recipient and file a copy with the IRS by January 31. Accurate completion and timely filing of the 1099-NEC is crucial to remain compliant with IRS regulations, avoid penalties, and ensure transparency in financial reporting. The form requires information about the payer, recipient, and payment amount, and should not be used for employee wages, which are reported on the W-2 form.

Key Takeaways

  • Reports non-employee compensation of $600 or more
  • Must be filed with IRS and provided to recipients by Jan 31
  • Not for reporting employee wages
  • Ensures regulatory compliance

Why It Matters

Proper 1099-NEC filing helps nonprofits comply with IRS rules and avoid costly penalties.

Real World Example

A nonprofit organization hires a freelance graphic designer to create promotional materials for an event, paying them $1,200 over the course of the year. Because the designer is not an employee and has been paid over $600, the nonprofit is required to complete and send a 1099-NEC to the designer by January 31 of the following year, and also file a copy with the IRS. If the nonprofit uses Aplos, it can easily track these payments throughout the year, ensuring no contractor is missed and all required forms are generated accurately and on time.

How Aplos Helps

Aplos streamlines the process of tracking payments to vendors and contractors, making it easier for nonprofits to identify who requires a 1099-NEC. Detailed transaction records in Aplos ensure accurate year-end reporting and simplify the preparation of required forms, helping organizations stay compliant.
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Frequently Asked Questions

Who needs to receive a 1099-NEC?

Any non-employee, such as an independent contractor, who is paid $600 or more in a year for services rendered must receive a 1099-NEC.

When is the 1099-NEC due?

The 1099-NEC must be provided to recipients and filed with the IRS by January 31 of the following year.

Does Aplos help with 1099-NEC reporting?

Yes, Aplos helps nonprofits track contractor payments and prepares the information needed for accurate 1099-NEC filing.

Related Terms

Fund
Encumbrance
Fringe Benefit
In‑Kind Contribution
W‑2
UBIT (Unrelated Business Income Tax)

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