Issuing 1099-NECs
Required for payments to unincorporated contractors of $600+ during the year. Get the contractor's W-9 before paying; issue by January 31 of the following year. The threshold applies per payee per year across all payments, and the form goes to the IRS and the contractor simultaneously, which is earlier than most other information returns and arrives fast after the holidays.
What counts and what doesn't
Services performed by nonemployees: subcontractors, freelancers, cleaning crews, designers, and attorney fees (which get a 1099 regardless of the lawyer's entity type). Excluded: payments to corporations generally, purchases of goods, and anything paid by credit card or third-party payment platform, because the processor reports those on a 1099-K. Paying a vendor through a card is therefore also outsourcing the reporting obligation, a legitimately useful simplification for small businesses.
Receiving 1099-NECs
Report on Schedule C (sole proprietor) or Schedule C of Form 1120-S (S-corp) or relevant partnership schedule. All income is reportable whether or not a 1099 was issued. The IRS matches every 1099-NEC against your return, so the reported total needs to at least cover the forms filed under your TIN; income the forms missed still belongs on the return, just without a matching document.
Penalties for issuers who skip it
Late or unfiled 1099s carry a per-form penalty that increases the longer they're outstanding, with amounts adjusted annually and a much steeper tier for intentional disregard. Filing late is always cheaper than not filing. Small businesses discovering years of unissued 1099s should also know the questions on their own business return asking whether required 1099s were filed are answered under penalties of perjury.
When the form is wrong
A 1099-NEC with the wrong amount or wrong recipient gets corrected by the issuer; ask promptly and in writing. If the issuer won't fix it, report the correct income with documentation and be ready to explain the difference. Recipients who were really employees, controlled schedule, provided tools, no independence, have a misclassification remedy through Form 8919 and SS-8 rather than quietly absorbing both halves of payroll tax on Schedule C.
Common questions
- What if the contractor is an S-corp or corporation?
- No 1099-NEC required for payments to corporations (with narrow exceptions for legal and medical payments, which do require 1099-NEC regardless of entity).
- I paid my contractor through a payment app. Do I still issue a 1099-NEC?
- Not for card or platform payments processed as business transactions; the processor's 1099-K covers them. Cash, checks, and bank transfers remain your reporting obligation.
- I got a 1099-NEC but I was really an employee. What now?
- File Form SS-8 to request a worker-status determination and Form 8919 to pay only the employee share of payroll taxes. Misclassification is the employer's liability to fix, not a tax rate you simply accept.
- No 1099 arrived for work I did. Do I still report the income?
- Yes, all of it. The form is an information document, not a permission slip. Your books, not the mail, determine your gross income.
Related
Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Monthly Bookkeeping
Monthly, quarterly, and annual bookkeeping with bank reconciliations, a profit-and-loss report, and balance sheet within ten business days of month-end.
Filling Out a Form W-9
A W-9 gives a payer your name, tax classification, and SSN or EIN to issue a 1099. Refusing or providing a wrong number triggers 24% backup withholding.
Related tax topics
Form 2553 S-Corp Election
Form 2553 elects S-corp tax treatment, due 75 days into the tax year (March 15 for calendar-year businesses). Late election relief covers most misses.
Form 1040-X Amended Return
Form 1040-X corrects income, deductions, credits, filing status, or dependents on a filed return. Refund claims have a three-year window from original filing.
Updating Your W-4
Adjust withholding after marriage, divorce, a new baby, a new job, or a refund or balance over $1,000. The current W-4 uses dollar amounts, not allowances.
Changing Your Address with the IRS
Form 8822 updates your address with the IRS. Undelivered notices don't excuse missed deadlines, so file before a 30-day letter goes to your old address.