1099-MISC vs. 1099-NEC: Which One Should You File?

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Understanding the difference between the 1099-MISC and 1099-NEC is crucial for accurate tax reporting. The 1099-NEC is used specifically for reporting non-employee compensation like payments to freelancers or independent contractors. The 1099-MISC now covers other types of payments, such as rent, royalties, or prizes. Using the correct form ensures IRS compliance and helps avoid potential penalties. Always verify the nature of the payment before filing to stay organized and penalty-free.