How to file 1099s

What a 1099 is

A 1099-NEC is a one-page form that tells the IRS what you paid someone who isn't an employee. Your drywall sub. The freelancer who built your website. The marketing person you pay monthly.

Employees get a W-2. Everyone else you pay for work gets a 1099-NEC.

What changed for 2026

The cutoff used to be $600, and it stayed there for decades. A new law raised it to $2,000 for payments made in 2026, the forms you'll file in January 2027. The higher cutoff doesn't save you any tracking, though. You won't know who crosses $2,000 until the year is over — that $800 contractor in March might be a $2,400 contractor by December.

Who gets one

• • Paid someone $2,000+ for work by check, cash, ACH, or Zelle? Yes.
• • Paid by credit card or PayPal? No. The card company reports it for you.
• • Paid an attorney? Yes, even if the firm is a corporation.
• • Bought products, not work? No.

Not sure? Collect a W-9 anyway. It costs you nothing and saves you in January.

Step 1

Get a W-9 from every contractor

A W-9 is a form with the contractor's legal name, address, and tax ID. You need it to file. Get it before you pay them, while they still want your money. Chasing one in January from someone you paid last spring is miserable.

W-9s never go to the IRS. You just keep them in a folder so the info is sitting there when filing season comes. And there's a real penalty for skipping this: if a contractor won't give you a tax ID, the IRS expects you to hold back 24% of their pay. Nobody wants that conversation.

Step 2

Add up what you paid each person

At year end, total what you paid each contractor. Skip anything that went through a card or PayPal. Anyone at $2,000 or more gets a form. Easy if you tracked payments all year. A lost weekend if you didn't.

Step 3

File by January 31

Send each contractor their copy and file with the IRS by January 31. You can file free through the IRS e-file system (it's called IRIS), through QuickBooks, or through a filing service that charges a few dollars a form.

Two things to know. If you're filing 10 or more forms for the year, W-2s and 1099s combined, you have to e-file. And late penalties stack up per form, so put the deadline on your calendar in December.

The mistakes that cost people

• • Waiting until January to collect W-9s.
• • Not tracking payments under $2,000, then scrambling when a contractor crosses the line.
• • Sending a 1099 for card payments the processor already reported.
• • Forgetting attorneys, who get one even as a corporation.

What about Venmo and PayPal income?

Different form, and you don't send it. Payment apps send a 1099-K, and Congress put that threshold back at $20,000 and more than 200 transactions a year. So no, Venmo isn't sending a form because someone paid you $700 for a side job. You still owe tax on the income either way.