Form 1099-NEC (CFP Explains!)

if you're a gig economy worker or an independent contractor you're going to receive this year a 1099 nec but what exactly is it and how does it detail your earnings and what do you do with that form really come tax time so i wanted to bring on an expert for you a certified financial planner an enrolled agent stephanie mcelhaney the president of financial planning at aspen wealth strategies in the metro denver colorado marketplace we've had stephanie on the channel before so i definitely recommend you watch any of those videos after this one so i'm excited to have stephanie back in the channel so stephanie welcome back how is your day going today it's pretty good thanks for having me back on the channel mike i really appreciate it absolutely and if you're watching this video this video is going to go into specifically the 1099 nec this is going to help you out massive value i'm pumped to have stephanie back on the channel so uh stephanie if this is the first time that someone is meeting you tell us a little bit about yourself and then we'll kind of roll into exactly you know what the 1099 ndc is sure uh so so as you mentioned i am a certified financial planner a cfp and an ea and enrolled agent so a cfp is somebody that just takes a look at people's comprehensive financial planning picture uh specifically though because of my enrolled agent designation i have a specific focus on personal income taxes so not only am i helping people get a grasp on the big picture but i'm also making sure that they are aware and cognizant of any tax implications that some of the financial strategies that they're employing um could have on them so an ea is essentially like a cpa but just kind of a tax half of the cpa so um we don't really deal with the accounting side of things uh but we do similar to cpas have unlimited practice rights uh before the irs with who we can represent and what tax matters we can handle well i appreciate that a true expert again i appreciate you being here uh back on the channel so today we're talking about this 1099 ndc and frankly this was kind of new to me as well because i know there's from different classifications of verb verbiage uh in years prior but what exactly i guess on the high level what what is this 1099 nbc yup so 1099 nec is essentially the the i don't even say the updated version of the 1099 um miscellaneous but it's kind of branched off and i i think the last year that the 1099 nec was used was actually like 1982 or something um so before you or i were even were even born um but the 1099 nec that is essentially it stands for non-employee compensation and it stands for um or rather it it's essentially a record of your full year self-employed earnings so uh you know it doesn't really matter when you started as long as we're talking about a calendar year so you know for 2020 we're looking back to that year but again this year we're using the the nec form but it's going to just be the record of your self-employed earnings for the year uh plus any federal income tax or you know state income tax that you would have uh withheld so in the previous video we talked about paying taxes self-employment taxes uh federal taxes um typically when you receive this form 1099 nec you're not gonna see any withholding on the federal or state side it's probably gonna have zero there which is why it's important to uh file taxes quarterly um but just keep an eye on that and you know just be aware if if you did uh withhold taxes for whatever reason that that you're reflecting that when you go to file the taxes and if you you're not seeing that and maybe it's a surprise uh that you're kind of aware that in future years you'll you'll likely have to take on the uh burden if you will of filing those quarterly taxes yourself awesome so you know a really a summation of your independent contractor earnings and if you're watching this if you drive for any of these gig economy apps doordash uber lyft postmates grubhub amazon flex shipped instacart there's a ton of them right you are going to receive a 1099 nec now um i know in the past it's been referred to as 1099 misc miscellaneous is there any difference between that um so there is now so the 1099 uh miscellaneous still exists it's still around um it's just now used to report miscellaneous income so things like uh you know maybe rent payments to an attorney just kind of random stuff so it does still exist the reason the irs decided to restitute the 1099 nec um is because there were separate filing deadlines with some of the income on the 1099 miscellaneous and they are hoping that it makes it easier for uh gig economy workers to get their taxes filed um with with less confusion fantastic appreciate that um now i know that we kind of mentioned you know who gets it right independent contractors i mean that could be you know even other independent contractors yeah if you're a plumber what have you uh electrician if you're if you're an independent contractor um now i have seen them starting to roll really they they've all basically um you know dropped into my email i get notifications hey your 10.99 is ready so um should i have already received it and then kind of who sends them out um should i have should i have already received it all right just talk to us a little bit about like the dates there yep sure um so first of all yeah you're right if you're an independent contractor that the cutoff limit is kind of like 600 bucks um if you're under 600 they may not necessarily send you one um but if if you're making over 600 you should have already received it at least electronically so um the mail has been fairly slow uh at least in this in this part of the world um we've had fairly uh significant delays through uh the postal service but um they were supposed to be ready typically in any year it's january 31st uh because this year it fell on a not a weekday um february first was was the deadline so theoretically again if you have electronic access to that uh you should already have it in your hands uh but if they mailed it you know i would give it another maybe a week or so before you start wondering where that is um but in terms of who you're gonna receive it from really from any any business that you worked for um any gig business so that could be uber lyft uh doordash you know you you rattled off quite a few names there but it's a lot um yeah so so don't just um you know don't just assume that you're gonna receive one 1099 um nec because you're thinking hey you know i was i was an independent contractor i was a you know i fall under non-employee compensation uh those companies don't they're not talking to each other so right you know regardless of how many you know places you worked at you won't just receive one you will receive uh 1099 nec from any company that you worked for in a given year assuming that you uh earned over 600 with them exactly leading for that last point that steph gave us so again if you're earning 600 typically or more exactly you're gonna see that in your emails in communication from these companies six hundred dollars in a gross revenue from these companies and yes you will receive a 1099 nec from really any company that hits that 600 plus dollars so make sure to check your email here so again i've been seeing them you know coming in i already basically have my 1099 ntcs for all of these apps and again it's quite a few so what do i do with it i mean i'm not a financial expert you know i'm a driver and if you're watching this you know what what do we do with these uh 10.99 yep so you should if you're if you are the the you know i don't want to use employee i would use that loosely because you're it's non-employee compensation right um but you know you working for these these companies as an independent contractor you're going to actually receive when you receive the 1099 and you see you should see uh copy b essentially it'll say on it um because you're the one receiving it you're not the one sending it out so it's actually not your responsibility to file it with the irs uh what you're going to do with it is you're going to use it to fill out your form 10 40 that's due in april every year april 15th and that's your federal tax return you'll also have to use it on on your state tax return so i won't really get into the state details because it really does vary state by state in terms of filing uh quarterly filings all of that but you're going to use those those figures on your 1099 nec that you get and you're actually going to put that those gross wages on line one of your schedule c which is part of your form 1040. so whether you you know if you're using a tax professional they should kind of understand all of this and be able to direct you to kind of what forms you need to bring them and and where they're going to ultimately kind of plug those numbers in um if you're using a tax software whether it be you know um turbo tax h r blocks um whatever it is you know you'll want to be cognizant of and hopefully it should prompt you on that but if it's asking you did you receive a 1099 nec did you receive multiple 1099 necs um you should be again filling out schedule c which is part of the form 1040 and you're going to be putting those figures on line one of that form i i can confirm that yeah just to kind of restate your last point there um so 1040 is really the um was it well i don't i'm going to make sure you use right verbature is that like the main form we're using in our filing right the 1040 correct yep the 1040 is that's kind of everything that's that's the uh that's the big form that's going to have anything from a federal perspective so keep in mind again folks that that has nothing to do with your state taxes i would recommend that you go onto your state website department of revenue website uh whatever website they have to figure out what forms you need to file for them again because they're all different and when you actually owe the taxes are going to be slightly different based on the state but yes the 1040 is the big one and there's multiple schedules with it and addendums and all this fun stuff because the irs doesn't to make it easy on us as taxpayers uh but yeah schedule c is is essentially compensation for like sole proprietors which is essentially is what an independent contractor um is that they're they're working for themselves and so that's why we use the schedule c for that and i can tell you if you're watching this and you are looking at using turbo tax self-employed let's say i've been doing that myself for the past couple of years it's very easy it'll just walk you through any additional income and make sure you're keeping a copy at least digitally of these 1099 nbc's because like steph mentioned you're going to have to fill that out and or if you're using let's say a cpa or other tax preparer obviously they're going to need those forms as well speaking of those forms here i'll go ahead and real quick micah if you don't mind me adding so you know people are saying or people might be asking okay it's filed on on my behalf i don't have to actually file the 1099 nec with anybody but kind of where does that come into play you know of course like i mentioned that you're going to file that information on line one of your schedule c but the irs is going to match up the information on those forms with what you put on your 1040 um schedule c line one to make sure that you're accurately reporting all of that so just be cognizant of that um that you know if you have four 1099 necs that you know you're reporting 50 000 across all of them uh the the the irs is going to look at what you're reporting on your 1040 for that on schedule or on schedule c line one and they're gonna say is that fifty thousand dollars you know essentially jiving with the four 1099 necs that we got from those four different companies for this individual so make sure that you are keeping a good record of everything that you received everything and that you're reporting the total amount across all of your forms on that schedule c yeah and um your next step if you're watching this after this video is make sure to watch the walkthrough that steph and i did more so on taxes at deductions i'll leave that video linked above make sure to watch that after this one but you know today i really want to deep dive on this 1099 nec but speaking of i mean what happens if i don't receive the 1099 any you know maybe the company hasn't sent it or maybe i am let's say you know the plumber electrician what have you that's an independent contractor what what if i just don't have the form yet what happens yeah um so you know depending on hopefully hopefully whoever you're working for makes this easy and i actually did uh some research so of course i i'm not in the gig um economy myself uh but i was looking around okay you know if i was a if i was an uber driver or if i was doing door dash you know what's going on if i don't get my 1099 nec and a lot of these companies um have a specific website for uh you know information on if you don't if you don't get the form who do you contact who do you reach out to uh what email address should you use um and a lot of them even say you know reach out to this specific email address giving us details that you didn't receive it um some will even say i think um don't email more than once necessarily it may take a few days to get back to you because you know if you're opening up a new case with them that could delay them responding to the first one so i would go on a case-by-case basis a business by business basis um you know google use your google foo um you know look at hey you know i work for this company um what if i didn't get it now that's now that's easy to say right if you're with uber or doordash or one of the bigger players in this space but let's say you know to mike's point what if you're a plumber or something a smaller business you should go directly to uh your manager um the per the the business that you're essentially contracting for directly uh and ask them exactly that's well said uh very powerful make sure to drop a like on this video if you appreciate that from steph here uh and exactly i'll i'll say the same thing you know there's definitely resources these companies all of the established apps in the gig economy they've been established they have resources for you i simply just do a search there and find the right website to get a copy of that um so as we kind of land the plane here on our deep dive really is there any other specifics anything else we should know details deadlines about this 10.99 and you say yep uh mike i would just say you know and i sent you a link um on this so if there if somewhere you can kind of link to it or or provide in the comments i think that'll be beneficial but you know guys taxes are overwhelming uh and i live in this world and i deal with taxes and they're extremely confusing uh depending on if you're using a tax professional or preparing yourself um there's just a lot of information out there um and it's it's kind of it's kind of a jungle um in terms of of all the different resources and what you have to do and when you have to do it and who you have to file with um so the one link i send to mike is actually a fairly good resource from the irs itself kind of sharing some different resources what you should be aware of what you should be prepared for uh and and like i said you know if you have a tax professional hopefully they're they're helping you with that um obviously if you're filing yourself using software um they should you know have resources for that but i would really encourage folks to either go to that link or you know go to directly to the irs website um do your research you know uh obviously if you're watching this video you're being proactive which is great um i would recommend watching that other video um it is a bit longer and obviously more detailed with the nuances of everything um but i think it's really important too especially like i said if you're filing taxes yourself to to be your own advocate um and to make sure that you feel comfortable with what you need where it's at because again um it's not easy it's complicated um and again i would just recommend doing as much research as you can ahead of time too so that you feel comfortable um you know again doing your own taxes if that's the case or advocating for yourself if you're using a preparer um or software well i appreciate that that's super powerful and i mean like you mentioned there i'm really my call to action to you watching this here are your next steps with all of these videos that steph's advising us in the financial space here um having these you know tax forms i would re-watch this video there's actually time codes linked down below in the description and we'll certainly include stephanie's link that she sent over down in the description as well and then i would also watch that more full walk through on taxes deductions uh really whenever you're watching this video simply to educate yourself or if you're watching this during the tax time so steph i appreciate you being on the channel here again lots of value definitely drop a like if you're watching this and you got a value in this video and i am going to link another video for you right over here that i want you to click or tap the screen on and definitely drop a like again if you got value into this video and i'll see in the next one

Channel: Your Driver Mike

Views: 6,303

Keywords: form 1099-nec, 1099-nec 2020, 1099-nec vs 1099-misc, 1099-nec due date, 1099-nec form, 1099-nec instructions 2020, 1099-nec due date 2021, 1099-nec vs 1099-misc 2020, doordash dasher taxes, uber taxes, Uber Eats taxes, postmates taxes, lyft taxes, Grubhub taxes, 1099-misc explained, 1099-nec explained, doordash dasher taxes explained, how do I pay taxes on doordash, how do I pay taxes as a doordash dasher, form 1099-nec explained, 1099-nec expenses, gig economy taxes

Id: ZGp4wenhSdA

Length: 17min 23sec (1043 seconds)

Published: Fri Feb 19 2021