The short answer
If you pay someone who is not your employee for services in the course of your trade or business, you may have to file Form 1099-NEC with the IRS and give the recipient a copy. Other business payments, such as rents and royalties, go on Form 1099-MISC. The dollar threshold depends on the year you made the payment: for most payment types, $600 for 2025 payments and $2,000 for 2026 payments. Some categories use other amounts in both years, such as $10 for royalties and $600 for gross proceeds paid to attorneys.
Thresholds by payment year
| Payment | Form and box | Paid in 2025 (filed in 2026) | Paid in 2026 (filed in 2027) |
|---|---|---|---|
| Services by a nonemployee (including parts and materials) | 1099-NEC, box 1a | $600 or more | $2,000 or more |
| Attorneys' fees for legal services | 1099-NEC, box 1a | $600 or more | $2,000 or more |
| Gross proceeds paid to an attorney (for example, a settlement) | 1099-MISC, box 10 | $600 or more | $600 or more |
| Royalties | 1099-MISC, box 2 | $10 or more | $10 or more |
| Rents; prizes and awards; other income; medical and health care payments | 1099-MISC, boxes 1, 3, and 6 | $600 or more | $2,000 or more |
| Any payment with backup withholding | 1099-NEC or 1099-MISC, box 4 | Any amount | Any amount |
The $2,000 threshold applies for tax years beginning after 2025. Publication 1099 (2026) says it will be adjusted for inflation beginning in calendar year 2027. For payments made after 2026, check the current instructions before relying on a specific amount. The $10 royalty threshold and the $600 threshold for gross proceeds paid to attorneys did not change.
Who must file
- Business payments only. Report only payments made in the course of your trade or business. Nonprofits and government agencies are also subject to these rules. Personal payments are not reportable.
- Nonemployees. Form 1099-NEC is for nonemployee compensation. Wages paid to employees go on Form W-2, not Form 1099.
- Payments to corporations are generally exempt — but attorneys' fees, gross proceeds paid to attorneys, and medical and health care payments must be reported even when the payee is a corporation.
- Card and app payments. Payments by credit card, payment card, and third party network transactions are reported by the payment settlement entity on Form 1099-K, not by you on Form 1099-NEC or 1099-MISC.
- Other exceptions include payments for merchandise, telephone, freight, storage, and similar items, and rent paid to real estate agents or property managers (who then report the rent they pay to the owner).
Form W-9 and backup withholding
Ask each payee to complete Form W-9 before you pay them, so you have their name, taxpayer identification number, and entity classification. If a payee does not give you a TIN, or the IRS notifies you that a TIN is incorrect, you generally must withhold 24% of reportable payments as backup withholding, deposit it, and report it. You must then file a Form 1099 for that payee regardless of the amount. The IRS says the higher threshold for 2026 payments also applies to backup withholding on the affected payments.
Deadlines
| Form | File with the IRS | Give the recipient a copy |
|---|---|---|
| 1099-NEC | January 31 (paper or electronic) | January 31 |
| 1099-MISC | February 28 on paper, or March 31 electronically | January 31; February 15 if you report amounts in box 8 or box 10 |
If a due date falls on a Saturday, Sunday, or legal holiday, it moves to the next business day. Deadlines are tied to the year after the payment year: 2025 payments were reported in early 2026, and 2026 payments are reported in early 2027.
E-filing and corrections
- E-file threshold: if you must file 10 or more information returns in total for the year (the IRS counts all types of information returns together, not each form type separately), you must file them electronically. The IRS offers the Information Returns Intake System (IRIS) for this.
- Corrections: for paper forms, follow Publication 1099. For electronic corrections, see Publication 5718 (IRIS application-to-application) or Publication 5717 (IRIS portal). Do not check the VOID box on a paper correction.
Penalties
Separate penalties apply for failing to file a correct return with the IRS and for failing to give a correct statement to the recipient. For information returns and payee statements due in 2026 (2025 payments), the IRS lists these amounts per return:
| When corrected or filed | Penalty per return (due in 2026) |
|---|---|
| Up to 30 days late | $60 |
| 31 days late through August 1 | $130 |
| After August 1, or not filed | $340 |
| Intentional disregard | $680 minimum, with no maximum |
Annual maximums are lower for small businesses with average annual gross receipts of $5 million or less. The penalty may not apply if you can show reasonable cause. Check the IRS information return penalties page for the amounts that apply to returns due in later years.
What changed on the 2026 forms
Besides the higher threshold, the December 2026 revisions of Forms 1099-NEC and 1099-MISC add boxes for reporting cash tips and the Treasury Tipped Occupation Code, and for reporting overtime compensation, and they split the address fields into separate boxes. These revisions are continuous-use: use them to report 2026 payments in early 2027 and later years until the IRS issues a new revision, but not for earlier years.
A contractor you paid $1,500 in December 2025 still needs a Form 1099-NEC, because 2025 payments use the $600 threshold — even though you file the form in 2026. The same $1,500 paid in 2026 would not require a Form 1099-NEC, unless you backup withheld from it.