Short version: For payments made in 2026, the 1099-NEC reporting threshold is $2,000 per payee, up from $600. Forms are due to recipients and the IRS by January 31 (the next business day when that falls on a weekend). Send one to each unincorporated vendor you paid $2,000 or more for services by cash, check, ACH, or wire; don't report card or payment-app amounts, which the processor reports on a 1099-K; collect W-9s now, not in January; and e-file if you file ten or more information returns of any kind. The November checklist below is the whole job.
Every January, somebody is chasing W-9s on the 28th. It doesn't have to be you. The 1099 process is maybe four hours of work for a typical small business if the vendor list is clean in November, and twenty hours of bad phone calls if it isn't. This is the sequence I run, updated for the threshold change that applies to 2026 payments.
The One Big Beautiful Bill Act, signed in July 2025, raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000, effective for payments made in 2026. The threshold is indexed for inflation starting in 2027, rounded to the nearest $100. The same law also restored the 1099-K threshold for payment processors to $20,000 and more than 200 transactions, retroactively.
Practical effect: your 1099-NEC count drops, sometimes by half. The occasional $800 repair, the $1,200 design job, the freelancer you used twice: none of those get a form for 2026. Don't delete those vendors from the tracker, though. The threshold is per payee, per year, and a vendor who was under it in 2026 may clear it in 2027.
A 1099-NEC reports nonemployee compensation: payments for services in the course of your trade or business. The test, in order:
| Question | If yes | If no |
|---|---|---|
| Did you pay them for services (not goods)? | Continue | No form. Materials, inventory, and products aren't reportable on NEC. |
| Did total 2026 payments reach $2,000? | Continue | No form. |
| Are they an individual, sole proprietor, partnership, or LLC taxed as one of those? | Continue | Corporations (C or S, including LLCs taxed as corporations) are exempt, with the exceptions below. |
| Did you pay by cash, check, ACH, or wire? | Report those amounts | Card, PayPal, Venmo-for-business, and similar payment-app amounts are reported by the processor on a 1099-K. Exclude them from your NEC total. |
The corporation exemption has carve-outs that trip people up every year:
And the one that catches contractors: subcontractors who supply labor and materials together get a 1099-NEC for the full amount if the invoice doesn't separate them. If a sub bills $30,000 for a job and $18,000 of it is materials, you can report the $12,000 labor only if the materials are separately stated on the invoice. If it's one number, report the whole thing.
You can't file a correct 1099 without the vendor's legal name, tax classification, and TIN, and the W-9 is how you get them. Two rules that save the most grief:
Read the W-9 when it comes in. Box 3 (tax classification) is what tells you whether they're exempt. An LLC that checked "C corporation" or "S corporation" doesn't get a form; an LLC that checked "individual/sole proprietor" or "partnership" does. Vendors get this wrong on their own forms constantly, so if the name on line 1 is a person and they checked corporation, ask.
| Item | Rule |
|---|---|
| Copy B to the recipient | By January 31, 2027. Since that date falls on a Sunday, the deadline moves to the next business day, Monday, February 1, 2027. Confirm on the IRS General Instructions for Certain Information Returns each year. |
| Copy A to the IRS | Same date as the recipient copy. There is no later date for e-filing on the NEC, unlike some other 1099s. |
| Extension | No automatic extension for 1099-NEC. Form 8809 extensions for NEC are granted only in limited hardship situations. |
| E-file requirement | Required if you file 10 or more information returns in total across all types (W-2s, 1099s of every kind, and others combined). Nearly every business with payroll crosses this line. File through IRIS (the IRS's free portal), your payroll provider, or QuickBooks' 1099 service. |
| State filing | Varies. Some states participate in the Combined Federal/State program; some require direct filing; some (including Nevada) have no state income tax and no filing. Check the threshold separately from the filing method: the $2,000 figure is federal, and a state is free to keep its own lower reporting threshold. Several have signaled they will stay at $600, so a vendor who generates no federal form may still generate a state one. Check the state where the recipient performed the work. |
| Penalties | Tiered by lateness, per form, and doubled for intentional disregard. Late is cheaper than never, so file what you have on time and correct later. |
Do this in the second week of November, when there's still time to fix things. Each step is small.
The one habit: treat the W-9 as part of vendor setup, not part of January. Everything else in this process is a report you can run in ten minutes.
This checklist slots into the year-end close the same way the monthly steps slot into the month-end close. If 1099s are the only thing you dread in January, the fix is a vendor list that's maintained all year, and that's a controller's job, not a bookkeeper's or a preparer's.
The 1099-NEC & W-9 Tracker 2026 applies the $2,000 threshold, excludes card and app payments, handles the corporation exemption including attorneys, and tells you in November exactly who still owes you a W-9.
$2,000 per payee for payments made in 2026, raised from $600 by the One Big Beautiful Bill Act. The threshold is indexed for inflation starting in 2027. The 1099-K threshold for payment processors was restored to $20,000 and more than 200 transactions.
Recipient copies and the IRS copy are both due January 31. For 2026 forms, January 31, 2027 is a Sunday, so the deadline moves to Monday, February 1, 2027. There is no later e-file date and no automatic extension for the NEC.
It depends on how the LLC is taxed, which is box 3 of the W-9. An LLC taxed as a sole proprietorship or partnership gets a form; an LLC taxed as a C or S corporation doesn't, except for legal services, which are reportable regardless of entity type.
No. Payments made by credit card, debit card, or third-party payment network are reported by the processor on Form 1099-K. Report only cash, check, ACH, and wire payments on the 1099-NEC.
If you file 10 or more information returns in total across all types (W-2s plus all 1099s and others), you must e-file. You can use the IRS's free IRIS portal, a payroll provider, or QuickBooks' 1099 e-file service.
You're required to backup withhold 24% from their payments and remit it to the IRS. The simpler fix is to require the W-9 before the first payment, so the question never comes up.
General guidance on information-return compliance, not tax or legal advice. Thresholds, deadlines, and e-file rules change; confirm the current year's rules in the IRS General Instructions for Certain Information Returns and with your tax preparer.
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