Getting 1099-K vs 1099-NEC right prevents IRS mismatch notices and keeps vendor relationships smooth. Use Form 1099-NEC when contractor services paid by ACH/check, wire, or cash total $600 or more for the year—or any amount if 24% backup withholding was taken. For payment card transactions, the payment settlement entity reports Form 1099-K for all amounts and for third-party network (TPSO) payments (e.g., PayPal), the platform reports Form 1099-K when total gross payments exceed $20,000 and there are more than 200 transactions (TY 2025) not the payer on Form 1099-NEC. If you want to know more, this guide explains in depth when to file each form and how to meet the filing and furnishing deadlines without stress.
How to Decide When to File 1099-K vs 1099-NEC?
Use this quick, four-step guide to determine whether the payment requires a 1099-NEC or a 1099-K:
1. Identify the purpose of payment
If the payment covers services (design, accounting, cleaning), continue to Step 2. If it involves goods or retail sales through marketplaces, the platform typically reports via Form 1099-K rather than the payer.
2. Determine the payment method
Payments made via ACH, check, wire, or cash are reportable on Form 1099-NEC when applicable. Once that is clear, ask: paid by PayPal or card—do I file 1099-NEC? The answer is no. Payments processed by payment cards or third-party networks (e.g., PayPal) are not reported on 1099-NEC by the payer and instead, they’re reported on 1099-K by the payment settlement entity.
3. Check the reporting threshold
- 1099-NEC: File at $600 or more, or any amount if federal tax was withheld.
- 1099-K: For payment card transactions, there is no threshold and all amounts must be reported. TPSO payments threshold stands at over $20,000 and more than 200 transactions (TY 2025 federal standard)—these amounts are reported by the processor/platform and not by the payer on Form 1099-NEC.
4. Determine who files
For direct payments for services, the payer files Form 1099-NEC. For card/third-party network payments, the TPSO/processor issues Form 1099-K.
Quick Glance: Comparing 1099-K and 1099-NEC
| Features | 1099-K | 1099-NEC |
|---|---|---|
| Type of payment reported | Payments processed via cards or third-party networks | Direct payments to independent contractors for services |
| Responsible filer | The payment processor/portal | The payer |
| Filing threshold | Payment card transactions: All amounts TPSO: Over $20,000 and more than 200 transactions |
Amount ≥ $600; file any amount if federal tax was withheld |
| IRS deadline | Paper: March 2, 2026 (February 28, 2026, is Saturday) E-file: March 31, 2026 |
General rule: 1099-NEC is due January 31 (file and furnish) This season (TY 2025, due 2026): Jan 31, 2026 is Saturday → deadline moves to Monday, February 2, 2026 for both IRS & recipient copies |
| E-filing requirement | Platforms e-file returns automatically as per compliance rules | Under the IRS e-file mandate, 10+ total information returns must be e-filed |
| Platform-handled payments | TPSOs and card processors report these amounts on 1099-K | Payers should NOT report these to avoid duplicate 1099-K and 1099-NEC filings |
Note:
- Recipient copies: Platforms generally send recipient copies by Jan 31 (rolls to the next business day if it’s a weekend or holiday).
- 1099-NEC due date: January 31 (file & furnish)—the statutory deadline if the due date does not fall on a federal holiday or weekend. Note that 1099-NEC due dates differ from forms like 1099-MISC (paper due March 2, 2026 and e-file due March 31, 2026 for TY 2025, because February 28, 2026 is a Saturday).
How to Prevent Duplicate 1099-K and 1099-NEC Filings
To prevent duplicate reporting, first export all vendor payments, including the date, amount, and payment method. Label each payment as Direct or Platform.
Next, total payments by vendor or EIN:
- For direct payments: File Form 1099-NEC if the total is $600 or more, or for any amount if federal tax was withheld.
- For platform payments: Do not file 1099-NEC—only keep the platform’s reports (e.g., 1099-K) for your records.
Verify vendor W-9s and Taxpayer Identification Numbers (TINs) for 1099-NEC filings, and apply backup withholding when required.
Remember the January 31 deadline to file and furnish Form 1099-NEC (or the next business day), and confirm any direct state filing requirements—CF/SF doesn’t cover every state.
Common Filing Mistakes and Solutions
| Error | Correct Payer Action |
|---|---|
| Reporting a card or app payment on both 1099-NEC and 1099-K | Remove the payment from 1099-NEC and keep the processor’s 1099-K for reference |
| Skipping 1099-NEC for small invoice amounts | Add up all payments per payee for the year and file once the aggregate reaches $600 |
| Not accounting for backup withholding on smaller payments | File 1099-NEC for any amount if federal tax was withheld |
| Overlooking the e-file requirement for 10+ returns | Submit electronically; paper filing isn’t permitted once you file 10 or more information returns in aggregate |
| Vendor name or TIN mismatch | Confirm the TIN and use the legal name exactly as shown on the W-9 |
| Treating goods purchases as services | File 1099-NEC only for services; platform-reported goods belong on 1099-K |
Direct State Filing Notes
The IRS Combined Federal/State Filing (CF/SF) program forwards some information returns to states that participate—but coverage and rules aren’t uniform, and a number of states still want a direct submission from the payer.
- Start by checking the recipient’s state and ask: Do they require a separate 1099-NEC filing or use an earlier deadline than federal?
- Don’t assume platform-reported payments are fully handled. Even when a processor issues a 1099-K, a few states still expect a payer submission in certain situations (for example, when state withholding is involved).
- Keep vendor addresses current so recipient copies arrive on time and you avoid rejections or late notices.
Practical Examples
| Scenario | Payer Action |
|---|---|
| Gave $700 via ACH (multiple invoices) to a freelance designer | File 1099-NEC as the payment type is contractor services paid by ACH/check, and the total exceeds the 1099-NEC $600 reporting rule for payers |
| Payment of $620 to an IT consultant via a corporate card | Do not file 1099-NEC — card payments are reported on Form 1099-K by the payment processor regardless of amount |
| $300 cleared to a copywriter via ACH with 24% federal tax withheld | File 1099-NEC; withholding triggers reporting even under $600 |
| Paid the same contractor $400 via PayPal and $350 by check | File 1099-NEC for $350 only; the $400 via PayPal is platform-handled (reported on 1099-K if threshold is met) |
| Paid $1,200 via PayPal to a marketplace artisan | Platform reports via Form 1099-K if thresholds are met; payer does not issue 1099-NEC for platform-processed payments |
Note: The federal TPSO standard is over $20,000 and more than 200 transactions for TY 2025, but a TPSO may still issue Form 1099-K below that amount. Payers should not file 1099-NEC for platform-settled amounts.
FAQs
1. If a platform files a 1099-K for amounts paid by PayPal or card, do I also file a 1099-NEC?
No. Don’t file 1099-NEC for platform-settled amounts; the payment processor (PSE/TPSO) is the filer for those transactions.
2. What is the threshold value for 1099-NEC?
File 1099-NEC when total payments for services per payee reach $600 or more. File for any amount if 24% backup withholding was taken.
3. When are 1099-NEC forms due?
File and furnish Form 1099-NEC—file with the IRS and furnish the recipient copy—by January 31 or the next business day if it falls on a weekend/holiday (for TY 2025, the deadline is February 2, 2026).
4. What if a contractor is paid partially via PayPal and partially via ACH?
Report only the direct payments (ACH/check/wire) on 1099-NEC. Platform-handled amounts belong with the processor on 1099-K.
5. Are goods subject to 1099-NEC reporting?
No. 1099-NEC is for services. Goods sold through marketplaces are reported on 1099-K by the platform (if thresholds are met).
6. What is the latest update on the 1099-K threshold?
The federal standard is over $20,000 and more than 200 transactions (restored in 2025). Note that processors may still issue a 1099-K below that amount if they want.
Avoid duplicate filings and missed deadlines with 1099Online.