Form 1099-NEC is the IRS form a US business uses to report nonemployee compensation: payments to freelancers, contractors and other non-employees for services. As of October 2026, the IRS instructions say the reporting threshold rises from $600 to $2,000 for tax years beginning after 2025, and the form is due by 31 January.
That threshold change is the headline. For years the rule of thumb was 'anyone you paid $600 or more'. For payments made in 2026 onwards, the IRS says the minimum for this kind of reporting is $2,000, and it may be adjusted for inflation from 2027.
Who you file a 1099-NEC for
You report payments made in the course of your trade or business to someone who isn't your employee, once they reach the threshold. The IRS spells out the edges:
- Personal payments aren't reportable. Paying a plumber at home is different from paying one at your shop.
- Nonprofits count. The IRS treats nonprofit organisations as engaged in a trade or business for these rules.
- Attorneys are the big exception to the corporation rule. Attorneys' fees of $2,000 or more paid in the course of your business go in box 1a of Form 1099-NEC, and the IRS says 'attorney' includes a law firm.
- Direct sales: sales of $5,000 or more of consumer products for resale can go in box 2 of the 1099-NEC or box 7 of the 1099-MISC. If you use the NEC, it's due by 31 January too.
Before you pay any new contractor, get a W-9 from them. That gives you their name and taxpayer identification number, and it's much easier to collect before the first invoice than in January.
Payments that don't go on a 1099-NEC
This is the bit that saves small businesses the most paperwork. The IRS says payments made with a credit card or payment card, and certain third-party network transactions, are reported on Form 1099-K by the payment settlement entity, not by you on a 1099-NEC or 1099-MISC. So if you paid a freelancer through a card processor or a payment app that issues 1099-Ks, that payment is the payment company's reporting job, not yours. My guide to 1099-NEC versus 1099-K goes through the split, and 1099-MISC versus 1099-NEC covers rent, prizes and the other payments that stay on the MISC.
The 1099-NEC deadline
| What | Rule | Source |
|---|---|---|
| File with the IRS | On or before 31 January, paper or electronic | Section 6071(c), quoted in the IRS instructions |
| Weekend or holiday | Moves to the next business day | IRS instructions |
| E-file threshold | 10 or more information returns in total, counting all types together | Effective for returns due on or after 1 January 2024 |
| Free IRS e-file route | IRIS, the Information Returns Intake System | IRS.gov/IRIS |
The 10-return e-file trigger catches more businesses than people expect, because it counts your W-2s, 1099-NECs, 1099-MISCs and other information returns together. If you've got a few staff and a few contractors, plan to e-file.
Getting the recipient's copy out
The 31 January date is for filing with the IRS, and the same form is what you use to furnish the information to the contractor. The IRS has made Copies 1, B and 2 of the 1099-NEC fillable online as PDFs at IRS.gov/Form1099NEC, so you can complete the recipient copy and a copy for your own files without software. The instructions also include rules for truncating the recipient's TIN on payee statements, which is worth doing when you post forms. Don't mix up the dates with the 1099-MISC: the IRS says that one is due by 28 February on paper or 31 March if you e-file.
Government payers aren't exempt either. The IRS says payments by federal, state or local government agencies are reportable too, so if you contract for a public body, expect a 1099-NEC from them.
Backup withholding
If a contractor won't give you a correct TIN, you may have to withhold federal income tax from their payments under the backup withholding rules. The same $2,000 minimum applies to backup withholding for tax years after 2025, according to the IRS. And if you do withhold anything under those rules, the IRS says you must file a 1099-MISC for that person whatever the amount, so don't let it surprise you.
New boxes for tips and overtime
The IRS has added new boxes to the 1099-NEC and 1099-MISC so payers can report cash tips and overtime compensation, following the 2025 tax law changes. Most small businesses paying freelancers won't use them, but don't be thrown when you see more boxes than last year's form.
Before you hire a contractor you should collect their details on the form in our guide to the contractor tax details form.
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My verdict
Collect a W-9 from every contractor before you pay them, keep card and payment-app payments separate in your books, and use $2,000 as your 2026 trigger, not $600. If you've got more than a handful of returns, e-file through IRIS or 1099 software and you'll be done long before 31 January.
Frequently asked questions
What is the 1099-NEC threshold for 2026?
The IRS instructions say the threshold rises to $2,000 for tax years beginning after 2025, and it may be adjusted for inflation from 2027.
When is Form 1099-NEC due?
On or before 31 January, whether you file on paper or electronically. If that falls on a weekend or holiday, it moves to the next business day.
Do I file a 1099-NEC for payments made by card or PayPal?
No. The IRS says card payments and certain third-party network transactions are reported on Form 1099-K by the payment settlement entity.
Do I need to send a 1099-NEC to a corporation?
Generally not, but attorneys' fees of $2,000 or more paid in the course of your business are reportable in box 1a even if the law firm is a corporation.
Must I e-file 1099-NEC forms?
Yes if you file 10 or more information returns in total, counting all types together.
Are personal payments reported on a 1099-NEC?
No. The IRS says only payments made in the course of your trade or business are reportable.
Is the 1099-MISC due on the same date as the 1099-NEC?
No. The IRS says Form 1099-MISC is due by 28 February on paper or 31 March if you file electronically, while the 1099-NEC is due by 31 January.
Can I fill in the contractor's copy online?
Yes. Copies 1, B and 2 of Form 1099-NEC are fillable PDFs at IRS.gov/Form1099NEC for furnishing to recipients and keeping in your own files.
