Form 1099-NEC: What a Small Business Owner Must File and By When

Who has to file Form 1099-NEC?

You file Form 1099-NEC when your business pays someone who is not your employee for services. The IRS instructions say to file it for each person you paid at least $2,000 for services performed by someone who is not your employee. That includes parts and materials. It also includes payments to an attorney.

The test is about your business. Payments for personal items, such as a plumber at your home, do not count. The rule covers payments made in the course of your trade or business.

What is the dollar threshold for 2026?

For payments made in 2026, the threshold is $2,000. The IRS instructions say the minimum threshold for these reports increased to $2,000 for tax years beginning after 2025. The instructions add that it may be adjusted for inflation beginning in calendar year 2027.

Earlier years used a $600 threshold. If you read an older article, check the year before you rely on it.

The last row comes from the instructions: you must also file for each person from whom you withheld federal income tax under the backup withholding rules, whatever the amount.

When is the 1099-NEC due?

Both the payee copy and the IRS copy are due January 31. The IRS instructions say you must furnish the statements and file with the IRS by that date. The instructions also say that if a date falls on a Saturday, Sunday or legal holiday, the due date is the next business day. January 31, 2027 is a Sunday, so the due date for 2026 payments moves to Monday, February 1, 2027. Confirm the date on the IRS page before you file.

Form 1099-MISC has later dates. Do not mix them up. The 1099-NEC is the early one.

Do payments to corporations count?

Generally, no, with exceptions. The IRS instructions say payments to a corporation generally need no 1099-NEC, including an LLC taxed as a C or S corporation. The instructions also say attorney fees must be reported even when paid to a corporation that provides legal services.

Ask each contractor for a Form W-9 before you pay. It records the name, tax classification and taxpayer identification number you need. For the form itself, read our Form 1099-NEC glossary entry.

What about card payments?

Do not report them on a 1099-NEC. Payments made with a credit card or payment card are reported on Form 1099-K by the payment settlement entity. Keep a clear record of how you paid each vendor. That is a bookkeeping habit worth building all year, not in January.

What if the person is really an employee?

Then a different form applies. Wages go on a Form W-2 and bring payroll tax duties. The 1099-NEC is for nonemployees only. Worker classification depends on facts, and a wrong call can be costly. Ask a CPA before you label someone a contractor.

What if a contractor will not give me a taxpayer ID?

Ask before the first payment, and keep the request on file. The IRS instructions say persons who have not furnished their taxpayer identification numbers to you are subject to backup withholding. For the rate and the steps, the instructions point to Publication 1099.

This is why a Form W-9 belongs in your onboarding. It is far easier to collect in March than the following January. If a contractor refuses, talk to a CPA before you pay the rest of the invoice.

Next step

Wallace CPA helps small businesses with bookkeeping and accounting. Call (877) 682-1171 or use the form at /contact to set up your contractor records before year end.

This post is general information, not advice for your situation. Talk to a CPA about your own situation before you file.