The 1099-NEC (Non-employee Compensation) is an IRS tax form used to report payments made to self-employed individuals, freelancers, and independent contractors. Businesses are required to issue a 1099-NEC to any non-employee they paid $600 or more during the tax year for services rendered. The form reports the total amount paid, which the recipient must then report as self-employment income on their tax return, typically on Schedule C. Unlike employees who receive a W-2 (with taxes already withheld), 1099 recipients receive the full payment without any withholding, meaning they're responsible for paying both income tax and self-employment tax on that income. The 1099-NEC replaced the older 1099-MISC for reporting non-employee compensation beginning in the 2020 tax year.