Form 1099-NEC is used by a business to report payments of $600 or more to a nonemployee(an individual or entity who is not on the company payroll) for their work or services.
The form is used by the IRS to track payments and help businesses stay compliant with the IRS Form 1099-NEC $600 reporting threshold. It also helps non-employees report their income on their personal tax returns.
Understanding Form 1099-NEC filing requirements is essential for every business.
Who Needs to File Form 1099-NEC?
The rule is simple:
Businesses, including LLCs, partnerships, estates, and government entities, and in some cases, corporations (related to payments for attorney services) that pay nonemployees $600 or more for their services in a year, must file the form.
Common scenarios that require filing a 1099-NEC:
- Payments to independent contractors & freelancers
- Commission payments to nonemployees
- Prizes or awards for services performed by a nonemployee
- Attorney fees for services, even if the law firm is a corporation
- Backup-withholding cases (any amount)
Who does not require a 1099-NEC?
There are certain exemptions to the 1099-NEC $600 reporting threshold.
- Most payments to corporations (including LLCs taxed as C or S corps) are exempt (except for attorneys and medical/healthcare payments).
- Employee wages are reported on Form W-2 and not Form 1099-NEC.
- Payments for personal expenses, like home repairs not related to your business
- Payments made via a payment processor are reported on Form 1099-K.
1099-NEC Filing Deadlines
When it comes to the 1099-NEC, the IRS requires you to e-file or paper file as well as send Copy B of the form on the same day: January 31. For 2026, the deadline falls on Feb 2 since Jan 31 is on the weekend.
| Filing Type | 1099-NEC Filing Deadline for 2026 |
|---|---|
| E-File / Paper Filing | February 2, 2026 |
| Recipient Copy Distribution | February 2, 2026 |
Filing an extension for 1099-NEC:
Unlike some other 1099 forms, the IRS does not grant an automatic extension for Form 1099-NEC. However, you can still file for an extension under special circumstances using Form 8809.
Why Is Form 1099-NEC Deadline Important?
Missing the deadline of January 31 has consequences that can result in hefty penalties or IRS notices. The IRS imposes penalties based on how late you file the form.
| How Many Days Late? | $ per Form | Max Limit |
|---|---|---|
| Filed within 30 days after the deadline | $60 per form | $683,000 per year ($239,000 for small businesses*) |
| Filed after 30 days but before August 1 | $130 per form | $2,049,000 per year ($683,000 for small businesses*) |
| Filed after August 1 or not filed at all | $340 per form | $4,098,500 per year ($1,366,000 for small businesses*) |
| Intentional disregard or intentionally not filing | $680 per form | No maximum limit |
Small businesses are businesses with an average annual revenue of less than $5 million.
Recipients, the nonemployees your business hired for their services, need the information on Form 1099-NEC when filing their personal tax returns. If you delay the filing on your end, they may file incorrect returns. It also damages trust between your business and contractors you hired.
Methods of Filing Form 1099-NEC
The IRS allows two methods of filing 1099-NEC: paper filing and e-filing. Though both are accepted, the IRS has been moving towards digitization, so e-filing is now their preferred method of filing.
Paper Filing
This method is ideal if you are filing less than ten (10) 1099-NEC forms in a tax year. However, it is time-consuming since you’ll have to manually fill out the forms and has a higher risk of errors. You can get official scannable 1099-NEC forms from the IRS or buy them from an authorized vendor.
E-filing
The IRS requires you to use the e-file method if you are filing more than ten (10) forms in a tax year. It is the faster option and can help you get immediate confirmation. You can also file multiple forms with minimal effort. Some third-party e-filing providers like 1099Online also offer built-in error checks and contractor copy distribution via email or print & mail.
Key Information Needed to File 1099-NEC
As part of Form 1099-NEC e-file compliance guide, businesses need to collect specific information before starting the filing process.
1. Payer or your business info
This includes your legal business name (as registered with the IRS), EIN, business address, and contact details.
2. Recipient or the nonemployee info
You’ll need to collect the full legal name of the contractor or vendor, their TIN, address by collecting Form W-9 from them.
3. Payment details
Calculate the total nonemployee compensation paid during the tax year to see if it reaches the 1099-NEC $600 reporting threshold. Don’t forget to check if any federal or state income tax needs to be withheld or not.
How to File 1099-NEC with 1099Online?
- Sign up for a new account or log in to your existing 1099Online account. Log in to 1099Online.
- Choose the type of form you want to file (Form 1099-NEC) from the dashboard.
- Enter your business and recipient details by using the bulk data upload feature.
- Report the payment amount and federal or state withholding, if any.
- Review your 1099-NEC form, and run a TIN check to validate the name and TIN against IRS records before submitting it to the IRS.
- Submit your forms in 1099Online with our one-click e-file, where we submit the form with the IRS and forward it to any applicable state.
FAQs
1. What is the dollar threshold that triggers a Form 1099-NEC?
The minimum dollar threshold that triggers a Form 1099-NEC filing is payment amount of $600 or more for services provided by a nonemployee during the year.
2. When are copies due to the contractor and the IRS?
All copies of 1099-NEC (Copy A for IRS and Copy B for recipient) are due on the same day: January 31.
3. Do payments to corporations ever require Form 1099-NEC?
Payments to corporations are exempt from Form 1099-NEC except for payments to an attorney or a law firm for their service.
4. Must multiple invoices be aggregated?
Yes, you should aggregate all the invoices and payments for the year to check if they reach the $600 threshold.
5. How does a payer correct an error after filing?
You can file a ‘CORRECTED’ form by checking the “CORRECTED” box on a new return with the accurate information and furnish the corrected forms to the recipient.
6. What penalties apply for late or inaccurate forms?
The penalties are $60 per return if correctly filed within 30 days, $130 if filed by August 1, $340 if filed after August 1 or not filed, and $680 for intentional disregard.
7. Are reimbursed expenses reportable in Box 1?
You can include reimbursements in 1099-NEC only when they are not properly accounted for under an accountable plan.