1099-MISC vs 1099-NEC: Which Form Do You Get and What's the Difference?

What Changed in 2020

Before 2020, all non-employee compensation (payments to freelancers, contractors, gig workers) was reported in Box 7 of Form 1099-MISC. Starting with the 2020 tax year, the IRS brought back the Form 1099-NEC (Non-Employee Compensation) specifically for contractor payments. This split reporting into two forms with different purposes.

Form 1099-NEC: For Contractor/Freelance Income

You receive a 1099-NEC when:

• You were paid $600+ as a non-employee (freelancer, contractor, gig worker)
• You provided services — not goods
• The payer is a business (not an individual paying for personal services)

Box 1 (NEC): Your total non-employee compensation. This goes on Schedule C as business income.

Box 4: Federal income tax withheld (rare for contractors, but possible)

Form 1099-MISC: For Other Types of Income

1099-MISC still exists — it now covers:

• Box 1: Rents — rental income you received
• Box 2: Royalties — book, music, oil/gas royalties
• Box 3: Other income — prizes, awards, legal settlements
• Box 6: Medical payments — payments to physicians/healthcare providers
• Box 10: Crop insurance proceeds

Quick Comparison

Form	Who Gets It	Tax Treatment
1099-NEC	Freelancers, contractors, gig workers	Schedule C → self-employment tax applies
1099-MISC	Landlords, royalty recipients, prize winners	Varies by box — some on Schedule E, some ordinary income

Do You Owe Self-Employment Tax on 1099-NEC Income?

Yes. Income reported on a 1099-NEC is subject to self-employment tax (15.3% on net earnings) in addition to regular income tax. You can deduct half of self-employment tax from your income, and you may be able to deduct business expenses to reduce the taxable amount.