Daperis CPAWhen Do I Need to Issue a 1099?
For payments made in 2026, you only need to issue a Form 1099-NEC to a contractor if you paid them $2,000 or more for the year. That's up from the long-standing $600 threshold, and it's a real change. If you paid a freelancer $2,500 for a project, they get a 1099. If you paid your cleaning contractor $1,800 across the year, they don't. It's a per-contractor, per-year test.
What Changed for 2026
The threshold jumped from $600 to $2,000. This applies to Form 1099-NEC (payments for services to non-employees) and Form 1099-MISC. It's a provision from the One Big Beautiful Bill Act, and it only applies to payments made on or after January 1, 2026. Anything you paid in 2025 still falls under the old $600 rule.
It's indexed for inflation starting in 2027. The $2,000 figure will adjust upward in future years, so don't assume it's frozen forever.
Backup withholding follows the same threshold. If a contractor hasn't given you a W-9, the backup withholding trigger now lines up with the new $2,000 mark instead of $600.
What Hasn't Changed
You still need a W-9 from every contractor
Just because you might not end up issuing a 1099 doesn't mean you skip collecting the paperwork. Get a completed W-9 before you pay anyone, every time, regardless of how much you expect to pay them over the year. Contracts get renewed, scope creeps, and a $1,500 job can easily become a $2,500 job by December.
Payment method still matters
If you paid a contractor by credit card, debit card, or through a third-party platform like PayPal or Venmo's business tools, you generally don't issue a 1099-NEC for that payment at all. The payment processor handles that reporting separately on Form 1099-K. Issuing both would double-report the same income. This is where most small business owners get tangled up, so know your payment methods before assuming you owe a form.
Corporations are usually exempt, with one big exception
Payments to a business that's structured as a corporation typically don't require a 1099, with one major carve-out: attorneys. Legal fees get a 1099 regardless of how the law firm is structured.
The deadlines aren't identical across forms
The Form 1099-NEC is still due to both the recipient and the IRS by January 31. For Form 1099-MISC, you must send the recipient their copy by January 31, but you have until March 31 to file it electronically with the IRS. Missing these dates, or misclassifying who needs a form, still carries real penalties.
Keep It Simple / Key Takeaway 🍕
Higher threshold, same discipline required. Collect the W-9 upfront, track what you paid and how you paid it, and let your bookkeeping system flag anyone who crosses $2,000 before January rolls around. Waiting until January to figure out who needs a form is how deadlines get missed.
Disclaimer: This article is for educational and informational purposes only and is not intended as financial, investment, legal, or tax advice. The author assumes no liability whatsoever in connection with its use. This content is not an exhaustive explanation of any topic, practice or process. You should always seek the advice of a licensed professional before making any accounting, tax, financial, investment or legal decision.