The January 1099 rush is one of the most predictable problems in small business. The deadline barely moves, the forms are familiar, and every year owners spend the last week of January chasing contractors for tax IDs.
For payments made in 2026, one important change works in your favor: the federal reporting threshold for many 1099 payments rose from $600 to $2,000 per payee. Here’s what changed, who generally gets a form, where owners get caught, and a calendar for getting through January without the scramble.
This guide is for owner-run small businesses that pay contractors and freelancers, with a CPA or bookkeeper helping at year-end.
What changed for 2026—and what didn’t
For payments made in 2026, the reporting threshold for Form 1099-NEC and most reportable payments on Form 1099-MISC increased from $600 to $2,000 per payee. The threshold may be adjusted for inflation beginning in 2027.
Some important exceptions remain:
- Royalties are generally reportable on Form 1099-MISC starting at $10.
- Gross proceeds paid to an attorney are generally reportable on Form 1099-MISC starting at $600.
- Attorney fees of $2,000 or more may be reportable on Form 1099-NEC, even when the law firm is incorporated.
- Medical and health care payments have their own reporting rules, including payments to corporations.
The calendar did not move. Form 1099-NEC is due to recipients and the IRS by January 31. In 2027, that date falls on Sunday, so the deadline moves to Monday, February 1. Form 1099-MISC recipient copies are generally due by January 31 as well; in 2027 the weekend adjustment moves that date to February 1. IRS filing deadlines differ by filing method: generally March 1 for paper and March 31 electronically in 2027.
Don’t confuse your 1099-NEC or 1099-MISC filing with Form 1099-K. Payment card companies report card transactions. Payment apps and online marketplaces generally report third-party network transactions when payments for goods or services exceed $20,000 and 200 transactions. Those are the processor’s reporting obligations—not a replacement for your own bookkeeping or income reporting.
See the IRS instructions for Forms 1099-MISC and 1099-NEC for the thresholds, exceptions, and filing dates.
Who generally gets a 1099-NEC from you
You generally file Form 1099-NEC when all of these are true:
1. You paid for services in the course of your business—not for goods.
2. The payee is not your employee. Employees receive a W-2.
3. You paid the payee $2,000 or more during 2026.
4. The payee’s tax classification and the type of payment make it reportable.
Ask each contractor for Form W-9 before the first payment. It provides the payee’s legal name, address, taxpayer identification number, and federal tax classification. Use it to set up the vendor record accurately; don’t infer the tax classification from the business name alone.
Common exceptions and payment methods
Corporations are generally exempt from Form 1099-NEC reporting, but there are exceptions—including certain attorney payments. Form 1099-MISC has its own rules, including reporting for medical and health care payments to corporations and gross proceeds paid to attorneys.
Payments made by credit card, debit card, or a third-party network such as PayPal generally belong on the payment settlement entity’s Form 1099-K, not in your 1099-NEC or 1099-MISC totals for those same payments. Keep the payment method recorded in your books so you can separate those transactions from checks, ACH, and other direct payments.
These are general rules, not a substitute for checking the IRS instructions against the payment type and payee. For edge cases, ask your CPA.
The classification trap
A 1099 does not decide whether someone is a contractor. The actual working relationship does. Calling someone a contractor and sending a 1099 does not protect you if the IRS or your state considers that person an employee.
The IRS weighs the full relationship, including:
- Behavioral control: Do you direct how, when, and where the work is done, or mainly specify the result?
- Financial control: Does the worker make business investments, offer services to other clients, and have a chance of profit or loss?
- The relationship: Are there employee benefits, an ongoing relationship, or work that is central to your regular business?
No single factor decides the issue. A fixed schedule, detailed training, a company title, or years of working exclusively for one business may be reasons to look more closely—but the determination depends on the whole set of facts. Some states use stricter tests, including versions of the ABC test.
If you are unsure about a worker, raise the question with your CPA before filing. Misclassification can lead to employment taxes and penalties. The IRS explains the federal factors in its guide to independent contractors and employees.
A calendar that prevents the January scramble
| When | What to do |
|---|---|
| November | Pull a list of everyone you paid for services this year. Total payments by payee and request missing W-9s from anyone near or above $2,000. |
| December | Finish collecting W-9s while contractors are still responsive. Ask your CPA about classification questions and unusual payments. |
| First week of January | Reconcile December, confirm year-to-date payee totals, and compare the report to your books and payment methods. |
| By Monday, February 1, 2027 | Furnish Forms 1099-NEC to recipients and file them with the IRS. Furnish applicable 1099-MISC recipient copies and W-2s by their adjusted deadline. |
| By Monday, March 1, 2027 | File paper Forms 1099-MISC with the IRS, if paper filing is permitted for your situation. |
| By Wednesday, March 31, 2027 | File Forms 1099-MISC electronically with the IRS. |
There is no automatic extension for Form 1099-NEC. Treat February 1 as a firm date, and verify all filing and recipient deadlines in the current IRS instructions.
How to file
If you file 10 or more information returns during the year, you generally must file them electronically. The threshold applies across information-return types; don’t count only your 1099-NECs.
Common options include:
1. IRS IRIS: The IRS’s free Information Returns Intake System lets eligible businesses prepare and submit many information returns online.
2. Accounting or payroll software: Some products can prepare and file 1099s from your vendor records.
3. A filing service: A dedicated provider such as Tax1099, an EZ partner, can prepare, e-file and deliver your 1099s to recipients, including many state filings.
Tax1099 is an EZ partner. If you sign up through our link, EZ may earn a commission at no extra cost to you. EZ does not prepare or file 1099s.
Many states also require copies or separate filings. Rules vary, so check your state’s requirements or ask your CPA before the federal deadline.
When a contractor won’t send a W-9
Ask for the W-9 before the first payment, not after the last one. If a payee does not provide a correct taxpayer identification number, backup withholding may be required on reportable payments. The current backup withholding rate is 24%; confirm when it applies and how to deposit and report it with your CPA. The IRS backup withholding guidance explains the rules.
Four habits that end the January rush
1. No W-9, no first payment. Make tax documentation part of contractor onboarding.
2. Flag reportable vendors when you create them. Use your accounting system’s tax-reporting settings so the year-end report has a head start.
3. Record how each contractor was paid. Checks and ACH may count toward your reporting totals; card and third-party network payments are generally reported by the processor.
4. Review totals quarterly. A contractor who crosses $2,000 in March is easier to handle in April than during the last week of January.
The common thread
The January panic is usually a records problem that surfaces in January. When vendor records, W-9s, and payment totals stay current through the year, 1099 preparation becomes a short review instead of a scavenger hunt.
Our bookkeeping plans keep vendor records and payee totals current each month, so your 1099 list is ready for your CPA or filing service. When it’s time to file, Tax1099 handles the e-filing. For the broader year-end close, see The Year-End Close Checklist Owners Skip.
This article is general information, not tax or legal advice. Reporting rules depend on the payee, payment type, accounting records, and state. Confirm your specific filing obligations with your CPA.