The $2,000 threshold, and what it replaced
Through 2025, a business filed a 1099-NEC for anyone it paid $600 or more for services. For payments made after 2025 the threshold is $2,000, and it may be adjusted for inflation from 2027.
So a designer you paid $1,500 in 2026 does not need a 1099-NEC, where the same payment in 2025 would have.
Who gets one and who does not
The form is for nonemployee compensation paid in the course of your trade or business. Most of the questions are about what falls outside that.
- Yes: services performed by someone who is not your employee, including parts and materials.
- Yes: fees to an attorney or law firm, even one that is a corporation.
- No: payments to a corporation, including an LLC taxed as a C or S corporation, apart from legal fees.
- No: payments by credit card, debit card or a third-party payment network. The card company or network reports those on Form 1099-K.
- No: personal payments. Paying someone to paint your own house is not a business payment.
- No: payments for merchandise, freight, storage and similar items.
- No: employees. Their pay goes on a W-2.
Get the W-9 now, not in January
Form W-9 is how a contractor gives you their correct taxpayer identification number and tells you what kind of entity they are. Ask for it before you pay, or at the latest in November, while people still answer email about this year.
A payee who does not give you a TIN can make you responsible for backup withholding. The 2025 General Instructions for Certain Information Returns set the rate at 24%, withheld from payments until the TIN is furnished. If you do withhold, you file a 1099-NEC for that person whatever the amount.
The W-9 also tells you whether the contractor is a corporation, which decides whether they get a form at all.
What counts toward the $2,000
The rule counts what you paid the person during the year. The date you paid decides the year, not the date on the invoice: a December 2026 invoice paid on 5 January 2027 belongs to 2027.
Add up every non-card payment to each person across the year. Payments made by card or through a payment network are reported on the 1099-K, not on your 1099-NEC.
Your Schedule C has the same figure on line 11, contract labor, which is a useful check: the 1099-NECs and line 11 should reconcile, allowing for card payments and payees under the threshold.
Due date, the weekend rule, and how to file
The 1099-NEC is due to the contractor and to the IRS on or before 31 January. The instructions say that when a due date falls on a Saturday, Sunday or legal holiday, the due date is the next business day. 31 January 2027 is a Sunday, so for payments made in 2026 the deadline is Monday 1 February 2027.
If you file 10 or more information returns of any kind in the year, you have to file electronically. The count is across all the forms together, not per form.
The IRS’s free portal for this is IRIS, the Information Returns Intake System. It handles up to 100 returns at a time, and it needs an IRIS Transmitter Control Code first, so apply well before January. Filing software and payroll services are the other route.
Mistakes that draw penalties
Penalties apply per return, both for filing late or incorrectly with the IRS and for giving the contractor a late or wrong statement. The amount rises the later the correct return is filed, with a lower annual cap for small businesses.
The usual causes are ordinary: a missing W-9, a wrong TIN, a payee left out because they were paid in several small amounts, and a deadline missed because nobody noticed it fell on a weekend.
What the state may also want
We could not find a New York rule requiring a business to send its 1099-NEC forms to the Department of Taxation and Finance. The Department’s withholding pages cover wages paid to employees, not payments to contractors.
The state boxes on the form are there for your convenience and are not needed by the IRS. If your contractors work in other states, ask your accountant whether any of those states wants a copy.