Do You Issue a 1099 to a Nonprofit? Exceptions and Required Payments

In most cases, you do not issue a 1099 to a nonprofit. Organizations recognized as tax-exempt under Section 501(c) are treated as exempt recipients, so the usual $600 reporting rule does not reach payments you make to them. The exceptions are narrow but firm: payments of $600 or more for medical or health care services, payments of $600 or more for legal services, and cash payments for fish purchased from someone in the fishing trade all require a 1099 no matter who the recipient is.

Why Most Payments to Nonprofits Skip the 1099

Federal rules require businesses to report payments of $600 or more made to non-corporate, non-exempt vendors in the course of a trade or business.¹ Tax-exempt organizations recognized under Section 501(c) sit in the exempt-recipient category, so that general threshold does not apply to them.² The IRS already collects detailed financial data from these organizations through their annual Form 990 filings, which makes a 1099 redundant for most payment types.³

So if you paid a 501(c)(3) charity for rent on event space, hired a 501(c)(6) trade association for a training session, or sent dues to a professional nonprofit, no 1099 is required. The exemption covers rent, most services, prizes, and other income categories that would otherwise be reportable.

One group that looks like a nonprofit but is not covered: a trust that calls itself charitable but has never obtained recognition as tax-exempt under Section 501(a). These non-exempt charitable trusts file Form 1041 and are treated as taxable vendors. If a payee’s W-9 does not include an exempt payee code, treat them that way too.

Payments That Always Require a 1099

Certain payment types override the recipient’s exempt status. The IRS wants these reported regardless of whether the payee is a corporation, a tax-exempt organization, or an individual.⁴

Medical and Health Care Services

Pay a nonprofit $600 or more for medical or health care services in a calendar year and the payments go on Form 1099-MISC, Box 6.⁵ This reaches nonprofit hospitals, clinics, mental health providers, and substance abuse treatment centers. Where a payment covers both services and supplies like injections or medical devices, report the full amount; there is no need to carve out the product portion.

Veterinary services sit inside the same rule. A nonprofit animal hospital or university veterinary clinic receiving $600 or more gets a 1099-MISC in Box 6. The carved-out category is payments to pharmacies for prescription drugs, which are not reportable.⁵

Legal Services

Payments to attorneys require 1099 reporting regardless of the attorney’s business structure, and that sweeps in nonprofit legal aid organizations. The form depends on what the payment is for:⁵

Attorney fees for services performed go on Form 1099-NEC, Box 1, when the total reaches $600.
Gross proceeds paid to an attorney in connection with legal services, such as a settlement check routed through counsel, go on Form 1099-MISC, Box 10, when the total reaches $600.

The “attorney” category is broad. It covers law firms, solo practitioners, corporate legal departments, and legal service nonprofits. Send settlement funds to a nonprofit legal clinic representing a client and you report those gross proceeds on Form 1099-MISC.

Cash Payments for Fish

Cash payments for fish or other aquatic life purchased from anyone in the fishing trade must be reported on Form 1099-MISC, even when the seller is a corporation or nonprofit.⁶ It is narrow, but seafood wholesalers and processors buying from nonprofit fishing cooperatives are the ones who need to know it exists.

Get a W-9 Before You Decide

The exempt-recipient rule only protects you if you can document that you relied on it. Request a Form W-9 from the nonprofit before you pay. The W-9 captures the organization’s Employer Identification Number and certifies its tax status.⁷ A 501(c) organization should enter exempt payee code “1” on line 4, which corresponds to organizations exempt from tax under Section 501(a).⁸ Keep the completed W-9 on file. If an audit ever asks why you didn’t issue a 1099, that form is your answer.

If the nonprofit does not give you a correct Taxpayer Identification Number on a W-9, you are required to begin backup withholding at a flat 24% on reportable payments.⁹ You deposit the withheld amount with the IRS and report it on Form 945.¹⁰ The withholding also gets reported on the appropriate 1099, meaning the exemption you were trying to rely on is lost. Collecting the W-9 up front avoids the whole chain.

If You Paid by Credit Card or Payment App

Payments made by credit card, debit card, or a third-party platform like PayPal or Venmo are reported by the payment processor on Form 1099-K, and IRS rules prohibit double-reporting the same transaction on both a 1099-K and a 1099-NEC or 1099-MISC.¹¹ So even when a payment would otherwise require a 1099 (medical, legal), you do not issue one if you paid by card or app. The card network handles it.

The Form 1099-K reporting threshold reverted to $20,000 and 200 transactions under the One Big Beautiful Bill Act, rolling back the lower thresholds that had been introduced (and repeatedly delayed) under the American Rescue Plan Act.¹² You only need to issue a 1099 yourself when you pay by check, cash, ACH, or wire.

Foreign Nonprofits Follow a Different Set of Rules

If the nonprofit is based outside the United States, none of the 1099 framework above applies. A foreign tax-exempt organization provides Form W-8EXP instead of a W-9 to establish its identity, foreign status, and any claim of exemption from withholding under sections like 501(c), 892, or 895.¹³ Without a valid W-8EXP, the default withholding rate on payments to any foreign person or entity is 30%.¹⁴ Foreign private foundations face a separate 4% withholding rate on U.S.-source gross investment income even with the form on file.

Payments to foreign nonprofits are reported on Form 1042-S, not on the 1099 series.¹⁴ The 1099 question doesn’t arise, but the withholding and 1042-S obligations are stricter and less forgiving of missed paperwork.

If You Already Issued a 1099 to a Nonprofit by Mistake

Caught the error before sending the form to the IRS? Mark the “VOID” box at the top of the form and set it aside.¹⁵

Already filed with the IRS? File a corrected return. Prepare a new 1099 with an “X” in the “CORRECTED” box at the top. Keep the payer and recipient information exactly as it appeared on the original, but change all dollar amounts to zero. That signals the IRS to disregard the original filing.¹⁵ Send a copy of the corrected form to the nonprofit so its records match yours.

Deadlines and Penalties When a 1099 Is Required

Where a 1099 is required for a payment to a nonprofit, the usual deadlines apply. Form 1099-NEC must be furnished to the recipient and filed with the IRS by January 31 of the year after the payment. Form 1099-MISC has the same January 31 deadline for the recipient copy, but the IRS filing deadline is February 28 on paper or March 31 electronically.¹ If you file 10 or more information returns of any type during the year, electronic filing is mandatory.¹⁶

Late or missing filings carry per-return penalties that grow the longer you wait. For returns due in 2026:¹⁷

Filed within 30 days of the deadline: $60 per return.
Filed after 30 days but by August 1: $130 per return.
Filed after August 1 or not filed at all: $340 per return.
Intentional disregard: $680 per return, with no cap on the total.

Small businesses, meaning those averaging $5 million or less in gross receipts over the three preceding tax years, face lower maximum aggregate penalties. The per-return figures still apply, but total exposure is capped at a reduced level. Penalties stack: one for failing to file the correct return with the IRS, another for failing to furnish the correct statement to the payee.¹⁷

1
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
2
Internal Revenue Service. Information Returns (Forms 1099)
3
Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard)
4
Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return?
5
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
6
Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
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Internal Revenue Service. Form W-9 (Rev. March 2024)
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Internal Revenue Service. Instructions for the Requester of Form W-9 (Rev. March 2024)
9
Internal Revenue Service. Backup Withholding
10
Internal Revenue Service. About Form 945, Annual Return of Withheld Federal Income Tax
11
IRS. Form 1099-K Frequently Asked Questions
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Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One Big Beautiful Bill
13
Internal Revenue Service. Instructions for Form W-8EXP (10/2023)
14
Internal Revenue Service. Foreign Governments and Certain Other Foreign Organizations
15
Internal Revenue Service. General Instructions for Certain Information Returns
16
Internal Revenue Service. E-File Information Returns
17
Internal Revenue Service. Information Return Penalties