Form 1099-NEC: who needs one, and when it’s due

Form 1099-NEC is the information return businesses use to report payments to independent contractors and other nonemployees. This guide covers who issues one, who receives one, the current reporting threshold, which payments are excluded and the filing deadline. Information only, not advice. A CPA or qualified accountant can confirm what applies to a specific business.

What Form 1099-NEC reports

Form 1099-NEC is used to report nonemployee compensation — typically fees for services performed by someone who is not an employee. Box 1 on the form captures that amount. The IRS Form 1099-NEC overview and the Instructions for Forms 1099-MISC and 1099-NEC are the official source.

Who needs to issue a Form 1099-NEC

A business that makes payments in the course of its trade or business generally has to file Form 1099-NEC if all of these apply:

1. The payment is for services (not goods).
2. The payment is made to someone who is not an employee.
3. The recipient is an individual, partnership, estate or, in some cases, an LLC.
4. The total paid to the recipient during the calendar year meets or exceeds the reporting threshold.
5. The payment was made by cash, check, ACH direct deposit, wire or similar method. Payments by credit, debit card or through a third-party settlement network such as PayPal are reported by the payment processor on Form 1099-K, not by the paying business on Form 1099-NEC.

Payments to C corporations and S corporations are generally not reportable on Form 1099-NEC, with a few exceptions set out in the IRS instructions — most notably, gross proceeds paid to attorneys are reportable on Form 1099-MISC regardless of entity type.

The reporting threshold changed for payments after 2025

Under the One Big Beautiful Bill Act (OBBBA), the Form 1099-NEC reporting threshold increased for payments made in tax years beginning after 2025. The IRS Instructions for Forms 1099-MISC and 1099-NEC state that Box 1 of Form 1099-NEC requires reporting of nonemployee compensation of $2,000 or more, and that the increase applies to tax years beginning after 2025. For prior tax years, the long-standing threshold on the IRS form was $600.

The IRS instructions note that the threshold may be inflation-adjusted starting in 2027. Confirm the current figure on irs.gov before filing.

When Form 1099-NEC is due

Both the recipient statement and the IRS filing are due January 31 following the calendar year of payment, per the IRS Instructions for Forms 1099-MISC and 1099-NEC. If January 31 falls on a Saturday, Sunday or legal holiday, the deadline moves to the next business day under the IRS general rule.

Filing options:

• Electronically through the IRS Information Returns Intake System (IRIS) or the FIRE system.
• Paper, using the official red-ink scannable form if the business qualifies. Businesses filing 10 or more information returns of any type across the year are generally required to file electronically.

Form W-9 and TIN collection

Before the first payment, the paying business should ask each contractor to complete Form W-9. The W-9 gives the business the contractor’s legal name, address, tax classification and taxpayer identification number (TIN). The TIN is what goes on Form 1099-NEC at year-end. If a contractor does not provide a valid TIN, the IRS backup withholding rules may apply.

What is not reported on Form 1099-NEC

• Employee wages. Reported on Form W-2.
• Payments to C corporations and S corporations, with narrow exceptions (notably attorney gross proceeds, which go on Form 1099-MISC).
• Rent, royalties and some other payments. Generally reported on Form 1099-MISC in the relevant box.
• Credit, debit card and third-party network payments. Reported by the processor on Form 1099-K.
• Payments for goods and products only. Only service payments are reportable in Box 1.

Illustrative example

Using illustrative round figures: a design agency pays a freelance illustrator (sole proprietor) $3,500 across 2026 by ACH for services, and a copywriter organized as a single-member LLC taxed as a sole proprietor $1,800 for services. Because the $2,000 threshold applies to tax year 2026, the agency issues a Form 1099-NEC to the illustrator (above $2,000) but not to the copywriter (below $2,000). A separate payment to a web developer organized as an S corporation is not reported.

How Nella fits in

Nella is an AI finance assistant built by the accountants at AccTek Ltd. It connects read-only to QuickBooks or Xero and produces a Form 1099-NEC contractor review list — the vendors and totals that meet the current threshold, with their W-9 status flagged. Nella does not file the forms. A CPA or qualified accountant signs off and files. More detail is on the Form 1099-NEC feature page.

Sources

• IRS: About Form 1099-NEC
• IRS: Instructions for Forms 1099-MISC and 1099-NEC
• IRS: About Form W-9
• IRS: E-file Forms 1099 with IRIS

Nella provides financial information and education, not accounting or tax advice. Nella shows you the numbers. When a question needs professional judgment, such as a filing or a tax decision, Nella says so and points you to a qualified accountant.