Does an Inc Get a 1099? Thresholds and Exceptions for 2026

In most cases, a business organized as a corporation does not get a 1099. Payments to C-corporations and S-corporations are generally exempt from Form 1099-NEC and 1099-MISC reporting because those entities file their own corporate returns with the IRS.¹ The exemption has real exceptions, though, and the biggest ones catch businesses off guard every January: attorney fees and medical payments require a 1099 even when the recipient is incorporated.

Why Corporations Are Generally Exempt

The reasoning is simple. C-corporations file Form 1120 and S-corporations file Form 1120-S, so the IRS already receives a direct report of their income.² A 1099 would duplicate information the agency already has.

The exemption only works when the vendor is actually a corporation. The way you confirm that is Form W-9. Every vendor should give you one before the first payment, and the form has a checkbox for federal tax classification.³ If the vendor checked C-corporation or S-corporation, you can generally skip the 1099. If they checked anything else, treat them as unincorporated. Don’t rely on “Inc.” in a business name as proof; the W-9 checkbox is the only reliable signal.

When an Inc Still Gets a 1099

Several categories of payment must be reported regardless of the recipient’s corporate status.⁴ These are the ones to watch.

Attorney Fees

Payments of $2,000 or more to a lawyer for legal services go on Form 1099-NEC even when the law firm is a professional corporation.⁴ This is the exception that trips up the most businesses, because law firms are so often incorporated.

A separate rule covers gross proceeds paid to an attorney in connection with legal services but not as fees for the attorney’s own work. Settlement money routed through a law firm’s trust account is the classic example. That reporting goes on Form 1099-MISC rather than 1099-NEC. The dividing line is whether you’re paying for the attorney’s services or passing money through the attorney to someone else.

Medical and Health Care Payments

Payments of $2,000 or more to any provider of medical or health care services require a Form 1099-MISC regardless of whether the provider is a corporation.⁵ That includes physicians, hospitals, clinics, dentists, and other health-related suppliers. When the provider is incorporated, list the corporation as the recipient rather than the individual practitioner. Payments to pharmacies for prescription drugs are carved out.

Fish Purchases and Substitute Dividends

Two narrower rules also override the corporate exemption. Cash payments of $2,000 or more to someone in the business of catching fish, when you’re buying for resale, go on Form 1099-MISC; “fish” covers all aquatic life.⁵ Substitute payments in lieu of dividends or tax-exempt interest paid to a corporation also require a 1099-MISC.

The $2,000 Threshold for 2026

Starting with tax year 2026, the minimum reporting threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000.⁶ The change was enacted as part of H.R. 1, applies to payments made after December 31, 2025, and will be indexed for inflation starting in 2027.

If you pay a non-corporate vendor less than $2,000 total across the year, no 1099 is required. The threshold sits on top of the corporate exemption, not instead of it: payments to a corporation remain exempt from most 1099 reporting even if they’re well above $2,000, and the exceptions above (attorney fees, medical payments, fish, substitute dividends) all use the same $2,000 trigger. The recipient still owes tax on the income whether or not you issue a form.

Payments by Credit Card or Payment App Don’t Count

Any payment made by credit card, debit card, or a third-party network such as PayPal or Venmo is excluded from your 1099-NEC and 1099-MISC obligations.⁴ The payment processor reports those transactions separately on Form 1099-K, so a second report from you would double-count the income.⁷

This rule applies to corporate and non-corporate vendors alike. If you paid a sole proprietor $5,000 for consulting and every dollar flowed through a credit card, you file nothing for that vendor. Only check, cash, ACH, and wire payments count toward your reporting threshold. For a vendor paid partly by card and partly by check, only the check portion gets reported.

LLCs and Other Edge Cases

LLCs are where the corporate question gets slippery. A limited liability company is a state-level entity that picks its own federal tax treatment, so an LLC can be taxed as a C-corporation, S-corporation, partnership, or disregarded entity.⁴ The W-9 shows both the LLC label and the tax classification. If the LLC checked C-corp or S-corp, treat it as a corporation and apply the exemption. If it checked partnership or disregarded entity, treat it like any other unincorporated vendor and file a 1099 when payments cross the threshold.

Payments to tax-exempt organizations, government agencies, and foreign governments are also exempt from 1099 reporting.⁵ Those come up less often but matter when you contract with a nonprofit or a municipal entity.

What a Wrong Call Costs

Treating a vendor as exempt when it shouldn’t be, or missing a required 1099 altogether, carries per-return penalties that climb with delay. For returns due in 2026, the IRS charges $60 per return up to 30 days late, $130 per return from 31 days through August 1, and $340 per return after August 1 or if never filed.⁸ Intentional disregard costs $680 per return with no cap. The penalty applies separately to the IRS copy and the recipient copy, so one missed 1099 can generate two charges.

The W-9 is your defense. Collect one from every vendor before the first payment, keep it on file, and let the checkbox decide whether a 1099 is required. Confirming entity status up front is far cheaper than filing corrections after January 31.

1
Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return
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Internal Revenue Service. About Form 1120, U.S. Corporation Income Tax Return
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Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
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Internal Revenue Service. Publication 1099 – General Instructions for Certain Information Returns (2026)
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Internal Revenue Service. Form 1099-K FAQs – Third Party Filers of Form 1099-K
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Internal Revenue Service. Information Return Penalties