1. They are not your employee
Independent contractor or other nonemployee. Employees get a W-2, and issuing a 1099 does not change what someone legally is.
Form 1099-NEC: Threshold Changed for 2026
The 1099 threshold just went from $600 to $2,000. Most people have not noticed.
For payments made during 2026, the general reporting threshold for nonemployee compensation is $2,000. It was $600 before then, so the forms you filed in January and the ones you file next January follow different rules.
- An LLC is not automatically exempt: the Form W-9 decides
- Credit card and payment app payments are reported by the processor, not you
- File 10 or more information returns and e-filing is mandatory
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The change
Two 1099-NEC thresholds, one year apart: $600 and $2,000
This is the thing to get straight before January. The threshold moved for payments made after December 31, 2025, which means right now you are living in both worlds at once.
| Payments made in | Threshold | Filed by |
|---|---|---|
| 2025 and earlier | $600 | January 31, 2026 (already done) |
| 2026 | $2,000 | January 31, 2027 |
The IRS instructions state the threshold 'may be adjusted for inflation beginning in calendar year 2027.' The same $2,000 figure applies to Form 1099-MISC, and to the point at which backup withholding obligations kick in.
Do not let this become a reason to stop tracking.
A contractor you pay $1,400 in 2026 may not need a form, but they still owe tax on it, you still need the expense substantiated, and if backup withholding applies you file regardless of the amount.
The test
Four conditions decide whether a 1099-NEC is required
All four have to be true before a form is due for that payee.
2. It was for services, for the business
Connected to your trade, business, rental, or nonprofit, not the person who fixed your own kitchen.
3. They are a reportable payee
Generally individuals, sole proprietors, partnerships, and estates. Corporations are usually exempt, with one large exception below.
4. You reached the threshold
$2,000 for 2026 payments, counted per payee for the calendar year, or any amount if backup withholding applies.
The mistake we see most
The LLC myth: 'they're an LLC, so I don't need to send one'
LLC is a state-law label, not a federal tax classification. An LLC can be taxed as a disregarded entity, a partnership, an S corporation, or a C corporation, and only the last two are generally exempt. You cannot tell which from the invoice, the name, or the website.
The Form W-9 tells you. That is its entire purpose: legal name, business name, federal tax classification, address, and taxpayer identification number.
There is also an exception that catches people. Payments to corporations are generally exempt, but not for legal services. The IRS instructions are explicit: 'The exemption from reporting payments made to corporations does not apply to payments for legal services.' If you paid a law firm for services, it is reportable regardless of how the firm is organized.
Collect the W-9 before you pay the first invoice
Not in January when you are trying to file. Chasing a vendor for a tax ID after the work is finished and the money has gone is one of the least successful things in small business.
Who does not get one
Payments that do not belong on a Form 1099-NEC
- Employees: that is a W-2 and a payroll question.
- Personal payments: anything outside your trade or business.
- Goods only: inventory, supplies, and products with no service element.
- Most corporations: subject to the legal services exception above.
- Anything paid by card or payment app: the processor reports it on a 1099-K. If you also issue a 1099-NEC for the same payment, the contractor gets taxed twice on paper and comes back to you about it.
- Rent, medical payments, and prizes: usually 1099-MISC, not NEC.
That fifth one is worth reading twice. Separating what you paid by check and ACH from what you paid by card, PayPal, or Bill.com is the single biggest source of duplicate reporting we see.
Dates and mechanics
The January 31 deadline and the 10-return e-filing rule
- Form 1099-NEC is due January 31, to the recipient and to the IRS. There is no later date for the IRS copy the way there is with some other forms.
- Ten or more information returns means mandatory e-filing. Since tax year 2023 the IRS has counted your returns in aggregate: 1099s, W-2s, and others added together. Six 1099s and five W-2s puts you over.
- Corrections should go in as soon as you spot them. Wrong name, wrong taxpayer ID, wrong amount, or wrong form type all produce notices and mismatches for the recipient.
- State filing may be separate. Requirements differ by state and are easy to miss when the federal filing goes smoothly.
What it costs
What 1099-NEC filing costs: a fixed fee in writing first
Send the vendor list and we will tell you how many forms are actually required, often fewer than expected. The fee comes in writing before any work begins, and the scope can be anything from three forms to a full ledger review with W-9 chasing.
Read it yourself
Official IRS sources on Form 1099-NEC filing
- IRS: Instructions for Forms 1099-MISC and 1099-NEC (December 2026 revision)
- IRS: Am I required to file a Form 1099?
- IRS: E-file information returns (the 10-return rule)
- IRS: About Form W-9
You never have to leave your home
The whole thing works online, securely, from anywhere
Vendor ledgers, W-9s, and payment reports all come through an encrypted portal, filings go out electronically, and nothing about this needs an office visit.
A secure client portal
Upload documents through an encrypted portal built for the job. Nothing sensitive travels by email, and everything stays in one place you can log back into.
Video or phone, when it suits you
Meet your preparer by video call or phone. No travel, no waiting room, and no taking a morning off work.
Electronic signatures
Review your return and sign authorizations electronically. Nothing needs printing, scanning, or mailing.
All 50 states, and abroad
We file in every state and work with clients living outside the United States. A different time zone is not a problem; we schedule around yours.
Prefer to sit across a desk from someone?
You can. Four walk-in offices: Bronx, Jamaica Queens, Buffalo, and Totowa NJ. Virtual is the default because it is faster for most people, not because it is the only option.
Questions people actually ask
Straight answers
Is the 1099-NEC threshold $600 or $2,000?
Both, depending on when you paid. Payments made in 2025 and earlier use the $600 threshold, and payments made during 2026 use $2,000, which you file by January 31, 2027. The IRS instructions state the amount may be adjusted for inflation beginning in calendar year 2027.Do I send a Form 1099-NEC to every LLC?
No, and you cannot tell from the name. Get the Form W-9 and look at the federal tax classification box. An LLC treated as a disregarded entity or a partnership is generally reportable, while one taxed as an S corporation or C corporation generally is not, apart from payments for legal services.I paid my contractor through PayPal. Do I still issue a 1099-NEC?
Generally no, if the payment settled through a payment card or a qualifying third-party network, because the processor reports it on Form 1099-K. Issuing a 1099-NEC for the same payment would duplicate the reporting, and the contractor appears to be taxed twice on paper. Check how the payment actually settled, because 'PayPal' covers more than one method.I paid someone $1,500 in 2026. Is there nothing to do?
No federal Form 1099-NEC is required on that amount alone, because the threshold for 2026 payments is $2,000. Keep the records anyway: it is still a deductible business expense you may need to substantiate, the contractor still owes tax on it, and state rules can differ. If backup withholding applies, you file regardless of the amount.What if the person should have been on payroll?
That is a bigger question than the form. Worker classification is decided by the facts of the relationship, and issuing a Form 1099 does not make someone a contractor. It is worth raising before it becomes an audit rather than after.I missed the 1099-NEC deadline or filed something wrong. What now?
It is fixable, and better dealt with now than after a notice arrives. Late and corrected information returns are routine work, and penalties generally scale with how long you leave it. A wrong name, taxpayer ID, amount, or form type should be corrected as soon as you spot it.
Related services
Where this connects to the rest of the practice
Bookkeeping
Clean vendor ledgers are what make 1099 season quick, so we keep your books coded and reconciled month by month.
Business Tax Services
Returns, information filings, and year-round compliance for LLCs, partnerships, and S corporations in New York and New Jersey.
Business Tax Planning
Decide how to pay contractors, owners, and staff before the year closes, rather than sorting it out in January.
Find out how many 1099 forms you actually have to file
Send the vendor list and the W-9s you have. We will tell you which ones are reportable, which are not, and what is missing. First review is free.
Nothing on this page is tax advice for your specific situation; outcomes depend on facts we would need to review with you. Information on this page is general and current as of July 30, 2026, based on the December 2026 revision of the IRS instructions for Forms 1099-MISC and 1099-NEC. It does not determine whether a particular worker, vendor, or payment is reportable; state requirements may differ.