Form 1099-NEC: who files and who receives it

Form 1099-NEC reports what a business paid its contractors. The threshold changed for 2026, and the exceptions cause more errors than the form itself. This guide covers who files, who receives one, what goes in each box, and what is left off.

By Awais Jameel, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

A business files Form 1099-NEC for each non-employee it paid $2,000 or more for services during 2026, up from $600 for earlier years. It goes to the payee and the IRS by February 1, 2027. Payments to most corporations, payments for goods, and payments made by card or payment app are generally left off, because they are exempt or reported elsewhere.

At a glance

Threshold for 2026 payments
$2,000 or more to one payee
Threshold for 2025 payments
$600
Due to payee and IRS
February 1, 2027, for 2026 payments
Electronic filing
Required if you file 10 or more information returns in total
Box 1
Nonemployee compensation
Usually excluded
Corporations, goods, card and payment app payments, employees
Form 1099-NEC: who files and who receives itThreshold for 2026 payments: $2,000 or more to one payee; Threshold for 2025 payments: $600; Due to payee and IRS: February 1, 2027, for 2026 payments; Electronic filing: Required if you file 10 or more information returns in total; Box 1: Nonemployee compensation; Usually excluded: Corporations, goods, card and payment app payments, employees.KEY FACTS AT A GLANCEForm 1099-NEC: who files and who receives itThreshold for 2026 payments$2,000 or more to onepayeeThreshold for 2025 payments$600Due to payee and IRSFebruary 1, 2027, for2026 paymentsElectronic filingRequired if you file 10or more informationreturns in totalBox 1Nonemployee compensationUsually excludedCorporations, goods, cardand payment app payments,employeesChecked against official sourcesTax BakersForm 1099-NEC: who files and who receives itThreshold for 2026 payments: $2,000 or more to one payee; Threshold for 2025 payments: $600; Due to payee and IRS: February 1, 2027, for 2026 payments; Electronic filing: Required if you file 10 or more information returns in total; Box 1: Nonemployee compensation; Usually excluded: Corporations, goods, card and payment app payments, employees.KEY FACTS AT A GLANCEForm 1099-NEC: who files and whoreceives itThreshold for 2026 payments$2,000 or more to one payeeThreshold for 2025 payments$600Due to payee and IRSFebruary 1, 2027, for 2026 paymentsElectronic filingRequired if you file 10 or more informationreturns in totalBox 1Nonemployee compensationUsually excludedCorporations, goods, card and payment apppayments, employeesChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

Who has to file Form 1099-NEC?

A business files Form 1099-NEC when, in the course of its trade or business, it pays a non-employee $2,000 or more during 2026 for services. The payer can be a sole proprietor, an LLC, a partnership or a corporation. Personal payments, such as paying someone to paint your own home, are not reported.

The threshold was $600 for payments made through 2025. The $2,000 figure applies to payments made from January 1, 2026, and is adjusted for inflation from 2027.

Who receives one?

  • Independent contractors and freelancers who are individuals.
  • Single-member LLCs that are disregarded for tax, reported under the owner's name and number.
  • Partnerships and LLCs taxed as partnerships.
  • Attorneys and law firms paid for legal services, even if they are corporations.

What is left off?

PaymentWhy no 1099-NEC
Payments to C or S corporations, including LLCs taxed as corporationsGenerally exempt, except for legal services
Payments for goods or merchandiseOnly services are reported
Payments by credit card, debit card or payment apps for goods and servicesReported by the payment company on Form 1099-K instead
Wages to employeesReported on Form W-2
Payments to foreign persons for work done outside the USNot US-source, and a Form W-8BEN documents foreign status
Rent, prizes and some other paymentsReported on Form 1099-MISC instead

Rents, royalties and other non-service payments go on Form 1099-MISC.

What goes in each box?

  • Payer and recipient details: names, addresses and taxpayer numbers, taken from the recipient's Form W-9.
  • Box 1, nonemployee compensation: the total paid for services in the year.
  • Box 2: a checkbox for direct sales of consumer products for resale of $5,000 or more.
  • Box 4, federal income tax withheld: any backup withholding.
  • Boxes 5 to 7: state tax withheld, state identification number and state income.

When is it due and how is it filed?

For 2026 payments, Form 1099-NEC is due to both the recipient and the IRS by February 1, 2027, because January 31 falls on a Sunday. Unlike many information returns, there is no automatic extension for filing Form 1099-NEC with the IRS. An extension on Form 8809 is granted only in limited circumstances.

If you file 10 or more information returns of all types in total for the year, you must file electronically. The IRS offers a free online portal for this, the Information Returns Intake System. Many states also require a copy, and some receive it through the IRS Combined Federal/State Filing Program.

What if you file late or get it wrong?

Penalties apply per form, and separately for the IRS copy and the recipient's copy. For forms due in 2027 they are $60 per form if corrected within 30 days, $130 if by August 1, and $340 after that or if never filed, with at least $680 for intentional disregard. See 1099 filing deadlines and penalties.

See how to correct a 1099 you already filed.

What if you receive a 1099-NEC?

Report the income on Schedule C, or the relevant business return, whether or not the form is correct, and report all your self-employment income even without a form. See reporting income without a 1099. If the amount is wrong, ask the payer for a corrected form. See how to file taxes as a freelancer.

Want your 1099s prepared and filed?

We total your contractor payments, check W-9s, and file Forms 1099-NEC with the IRS and your state, sending each contractor their copy.

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Questions people ask

What is the 1099-NEC threshold for 2026?

$2,000 or more paid to one non-employee for services during 2026. For payments made in 2025 and earlier, it was $600.

When is Form 1099-NEC due in 2027?

February 1, 2027, to both the recipient and the IRS, because January 31 falls on a Sunday.

Do I send a 1099-NEC to an LLC?

Yes, if the LLC is taxed as a sole proprietorship or partnership. Generally no if it is taxed as a corporation, unless the payment is for legal services.

Do I file a 1099-NEC for contractors I paid by PayPal or card?

Generally no. Payments by card or payment app are reported by the payment company on Form 1099-K.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IRS: Instructions for Forms 1099-MISC and 1099-NEC
  2. IRS: Information return penalties
  3. IRS Revenue Procedure 2025-32: penalty amounts for returns required to be filed in 2027
  4. Internal Revenue Code section 6041: information at source, as amended by Public Law 119-21 (2025)

Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.

Payroll and contractorsHow to pay contractors and file their 1099sPayroll and contractors1099 filing deadlines and penaltiesFederal tax formsForm W-9: when to ask for it and how to fill it in

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This guide is general information. It is not tax or legal advice for your situation.