Who Needs a 1099-NEC, and What Changes for 2026 Payments?

What is a 1099-NEC?

Form 1099-NEC reports nonemployee compensation: what your business paid for services to someone who is not on your payroll. Typical examples are independent contractors, freelancers, consultants and unincorporated service businesses. Employees get a W-2 instead, and payments such as rent go on other forms, such as the 1099-MISC.

Who needs to receive a 1099-NEC?

As a general rule, you send a 1099-NEC when all four of these are true:

• You paid for services, not goods.
• The person or business you paid is not your employee.
• You paid them in the course of your business, not for personal work.
• Their total for the year reached the threshold: $600 for payments made in 2025, or $2,000 for payments made in 2026.

That usually covers individuals, sole proprietors, partnerships and LLCs, unless the LLC is taxed as a corporation. Most corporations do not need one; see the exceptions below.

When is the 1099-NEC due?

Form 1099-NEC is due to the contractor and to the IRS by January 31 of the year after you paid them. If January 31 falls on a weekend or legal holiday, the deadline moves to the next business day. Late or missing forms can bring IRS penalties, so it helps to have contractor totals ready from closed December books.

Why should I collect a W-9 before I pay?

A Form W-9 gives you the contractor's legal name, address, taxpayer identification number and tax classification, which tells you whether they need a 1099 at all. Ask for it before the first payment, while the contractor is waiting to be paid. In January, the same request can take weeks. If a contractor will not give you a taxpayer identification number, backup withholding rules can apply, so ask your tax professional before you pay them.

Who does not need a 1099-NEC?

Common exceptions include:

• Most corporations. Payments to C corporations and S corporations generally do not need a 1099-NEC. Payments to attorneys for legal services are an exception: they are generally reported even when the law firm is a corporation.
• Card and payment-app payments. Payments you made by credit card, debit card or a payment app that reports them on Form 1099-K are generally left off the 1099-NEC, because the payment company reports them instead. Checks, cash and direct bank transfers are not covered by this exception.
• Payments for goods. Products, inventory and supplies are not payments for services.
• Employees. Wages go on a W-2, not a 1099.
• Personal payments. Work done for you personally, not for the business.

What changes for payments made in 2026?

For payments made in 2026, the IRS reporting threshold for most 1099-NEC and 1099-MISC payments rises from $600 to $2,000. The forms due by January 31, 2027 cover 2026 payments, so they use the $2,000 threshold; the forms for 2025 payments used $600.

Three things stay the same:

• The threshold applies to the total you paid each contractor during the year, not to each payment.
• A contractor below the threshold still owes tax on the income. The threshold only decides whether you file the form.
• W-9s still matter. Collect one from every contractor, because you will not know in January who crossed the line.

This guide is general information, not tax advice. Confirm your own filing requirements with a tax professional.

How does Korven handle 1099s?

Korven collects missing W-9s, checks each contractor's yearly total against the threshold, and prepares your 1099s in time for the January 31 deadline. For monthly bookkeeping clients, the contractor totals come straight from closed December books.

How pricing works. 1099 work is quoted as one flat price, scoped to how many contractors you paid and how many W-9s are missing, and confirmed in writing after a free review, before any work starts. Never hourly.

Korven prepares your books and tax file; our licensed CPA partner prepares, signs and files your return. See Business Tax Preparation, Without the April Scramble and How Do I Prepare My Small Business for Tax Season?

What else do people ask about 1099s?