1099-MISC vs 1099-NEC: Which Form, Which Box, Which Deadline

The two forms look almost identical, which is why so many small businesses mix them up. The rule of thumb is simple: if you paid someone who isn't your employee to do work for your business, it's a 1099-NEC. If you paid for something other than services, like renting a space or a royalty, it's probably a 1099-MISC. The detail is in the thresholds and deadlines, and some of those have just changed.

Quick answer: which form?

You paid	Form	Threshold (12/2026 instructions)
A freelancer, contractor or consultant for services	1099-NEC, box 1a	At least 2,000 dollars
An attorney's fees for legal services	1099-NEC, box 1a	2,000 dollars or more
Rent for an office, equipment or machine	1099-MISC, box 1	2,000 dollars or more
Royalties	1099-MISC, box 2	At least 10 dollars
Prizes, awards or other income (not for services)	1099-MISC, box 3	2,000 dollars or more
Medical and health care payments	1099-MISC, box 6	2,000 dollars or more
Gross proceeds to an attorney, such as a settlement	1099-MISC, box 10	At least 600 dollars
Direct sales of consumer products for resale	Either form	5,000 dollars or more

The threshold change people miss

For years, the familiar number for contractors was 600 dollars. The IRS instructions dated 12/2026 now say to file a 1099-NEC for each person you paid at least 2,000 dollars for services during the year. Even the IRS's own 2025 Schedule C instructions mention 600 dollars for contract labour, and many online guides still say 600, so check the date on whatever you're reading. Note the odd one out: gross proceeds paid to an attorney on the 1099-MISC still starts at 600 dollars, and royalties start at only 10 dollars.

Deadlines

Form	To the recipient	To the IRS
1099-NEC	January 31	January 31
1099-MISC	January 31	February 28, or March 31 if you file electronically

The 1099-NEC deadline is the tight one: both copies are due on the same day, with no extra time for the IRS copy. If you report direct sales on a 1099-NEC instead of a 1099-MISC, that IRS copy is due by January 31 too.

Prizes and awards: a common mistake

A prize you give a contractor because of the work they did, like a bonus for the top-performing freelancer, isn't "other income" on a 1099-MISC. The IRS says prizes and awards for services performed by non-employees go on the 1099-NEC instead. A prize from a competition that wasn't tied to services is the kind of payment that belongs on the 1099-MISC.

Paying lawyers

Legal payments are the exception to the usual rule that you don't send 1099s to corporations. The IRS says that exemption doesn't apply to legal services, so a law firm set up as a corporation still gets a form. Fees for the lawyer's own services go in box 1a of the 1099-NEC; settlement money paid to a lawyer on someone else's behalf is gross proceeds in box 10 of the 1099-MISC. Ask for a W-9 to get their taxpayer number before you pay.

Direct sales: the one you can put on either form

If your business sells consumer products to someone on a buy-sell or commission basis for them to resell, and the total is 5,000 dollars or more, the IRS lets you report it in box 7 of the 1099-MISC or box 2 of the 1099-NEC. Choose the 1099-NEC and the IRS copy is due by January 31 rather than the later 1099-MISC dates, so pick the form that fits the rest of your filing for that person and note the deadline that comes with it.

If you're the one receiving the form

Whichever form arrives, the income still needs reporting, and for most freelancers it goes on Schedule C. Forms are a cross-check, not your income record: with the higher 2,000 dollar threshold, you may get fewer 1099s than before for the same work, but you still owe tax on it. Keep your own invoice list and report everything.

Worked examples for a small business

Payment during the year	Form
2,500 dollars to a freelance web designer	1099-NEC
1,500 dollars to a freelance copywriter	No 1099-NEC required at the 2,000 dollar threshold
12 months of office rent totalling 9,600 dollars to an individual landlord	1099-MISC, box 1
50 dollars in royalties to a photographer for a licensed image	1099-MISC, box 2
3,000 dollars to a law firm for contract work	1099-NEC, box 1a

These examples are mine, applying the thresholds in the 12/2026 IRS instructions. When a payment is close to a threshold, add up everything you paid that person across the year, not just one invoice.

Steps for a small business at year end

1. List everyone you paid during the year who isn't an employee.
2. Collect a W-9 from each one, ideally before you pay them.
3. Split payments into services (1099-NEC) and other types (1099-MISC).
4. Apply the thresholds from the current instructions, not an older version.
5. Send 1099-NECs to recipients and the IRS by January 31.

My verdict

Think services vs everything else, and check the threshold date on any guide you use, because the 2,000 dollar figure changes who gets a form. Good records make January painless: see my picks for receipt scanner apps and e-signature tools for collecting W-9s, and how remote bookkeepers work if you'd rather hand it off.

Frequently asked questions

What's the difference between 1099-MISC and 1099-NEC?

1099-NEC reports payments to non-employees for services. 1099-MISC reports other payments such as rent, royalties, prizes, medical payments and attorney gross proceeds.

What is the 1099-NEC threshold?

The IRS instructions dated 12/2026 say to file for each person you paid at least 2,000 dollars for services.

When is the 1099-NEC due?

By January 31, to both the recipient and the IRS.

Do I send a 1099 to a law firm that's a corporation?

Yes. The IRS says the corporate exemption doesn't apply to payments for legal services.

What's the 1099-MISC threshold for royalties?

At least 10 dollars.