To file a 1099-NEC for contractors, collect a completed Form W-9 from every nonemployee you paid $600 or more during the year by check, cash, ACH, or wire; enter their name, address, and Taxpayer Identification Number on Form 1099-NEC along with the gross amount in Box 1; send Copy B to the contractor and Copy A to the IRS by January 31. If you’re filing 10 or more information returns of any kind combined, Copy A has to go in electronically.
Who You Have to File For
Three conditions have to be true. You made the payment in the course of a trade or business, the recipient is not your employee, and the total you paid that person or entity reached at least $600 for the year. Personal payments don’t count. Hiring someone to paint your house triggers nothing; hiring a freelance designer for your business does.1Internal Revenue Service. Am I Required To File a Form 1099 or Other Information Return
Entity type matters. You generally file for payments to individuals, sole proprietors, partnerships, and single-member LLCs that are disregarded entities. Payments to C-corporations and S-corporations are usually exempt.1Internal Revenue Service. Am I Required To File a Form 1099 or Other Information Return
For a single-member LLC that hasn’t elected corporate tax treatment, the IRS looks through the LLC to the owner. Use the owner’s name and SSN or EIN on the 1099-NEC, not the LLC’s own EIN, unless the LLC has employees or excise tax obligations that require its own number.2Internal Revenue Service. Single Member Limited Liability Companies
Two categories override the corporate exemption. Payments for legal services go on Form 1099-NEC even if the law firm is incorporated. Payments of $600 or more for medical and health care services go on Form 1099-MISC (Box 6), even if the provider is a professional corporation; tax-exempt hospitals and government-run facilities are the exception.3Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
The Payment Method Changes What You Report
Payments made through a credit card, debit card, or third-party network like PayPal or Venmo for Business are not reported on your 1099-NEC. The payment processor handles those on Form 1099-K, and the IRS doesn’t want the same dollars reported twice.4Internal Revenue Service. Form 1099-K FAQs: Third Party Filers of Form 1099-K
So a 1099-NEC covers only what you paid by check, cash, ACH bank transfer, or wire. If you paid a contractor $8,000 total but $5,000 went by credit card and $3,000 by check, you report $3,000. The $5,000 belongs to the processor.5Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill
Get a W-9 Before You Pay
Request a completed Form W-9 from every contractor before the first payment goes out. The W-9 gives you the legal name, business structure, address, and TIN you need on the 1099-NEC. Collecting it upfront prevents a scramble in January.6Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
If a contractor refuses or hands you something incomplete, the IRS requires backup withholding at 24% on future payments until a valid TIN is provided.7Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice
The IRS also offers a free TIN Matching service that checks whether a name-and-TIN combination matches its records before you file. Running the check now is much less painful than dealing with a CP2100 notice and B-Notice process later.8Internal Revenue Service. Taxpayer Identification Number (TIN) Matching
Filling In the Form
You can complete Form 1099-NEC through the IRS’s free IRIS portal, through accounting software, or on official paper forms ordered from the IRS. Do not print Copy A from a downloaded PDF for submission to the IRS. Copy A has to be the machine-scannable red-ink version; the downloaded PDF is fine for the recipient copy only.
Enter your business name, address, and EIN in the payer section. Copy the contractor’s legal name, address, and TIN from their W-9 into the recipient fields. Put the total gross amount you paid in Box 1. Report the full amount before any deductions the contractor might claim: if you paid $15,000 for services, report $15,000 even if the contractor’s materials cost them $3,000.9Internal Revenue Service. Form 1099-NEC (Rev. April 2025)
Confirm the TIN before submitting. A name/TIN mismatch produces a CP2100 notice, forces you to send a B-Notice to the contractor, and can push you into backup withholding at 24% on future payments if a second mismatch occurs within three years.10Internal Revenue Service. Backup Withholding “B” Program
Form 1099-NEC covers nonemployee compensation, meaning fees for services. Rent, royalties, prizes not tied to services, and certain legal settlements belong on Form 1099-MISC instead.11Internal Revenue Service. About Form 1099-NEC, Nonemployee Compensation
Sending It In
The form has multiple copies. Copy A goes to the IRS. Copy B goes to the contractor. Copy C is for your files. Keep your copies at least three years.12Internal Revenue Service. Topic No. 305, Recordkeeping
Electronic Filing
If you’re filing 10 or more information returns of any type in a calendar year, electronic filing is mandatory. The 10-count is combined across W-2s, all 1099 varieties, and other information returns, so even a small batch of 1099-NECs can trigger the requirement if your overall total hits 10.13Internal Revenue Service. E-File Information Returns
Two IRS systems handle e-filing. The Information Returns Intake System (IRIS) is the newer free portal where you can key forms directly in a browser or upload files. The Filing Information Returns Electronically (FIRE) system is the older platform and needs compatible software. Both require a Transmitter Control Code, which you apply for through the IRS before your first filing.14Internal Revenue Service. E-File Information Returns With IRIS
If e-filing would cause genuine hardship, you can request a waiver on Form 8508 at least 45 days before the filing deadline. It covers one tax year, and the IRS doesn’t begin processing requests until January of the year the returns are due.15Internal Revenue Service. Topic No. 803, Electronic Filing Waivers or Exemptions and Filing Extensions
Paper Filing
Under the 10-return threshold, paper is still allowed. Mail Copy A to the IRS with Form 1096 as the transmittal cover sheet. Form 1096 totals up the batch: dollar amounts, form count, your identifying information. You need a separate 1096 for each form type: one for your 1099-NECs, another for any 1099-MISCs.16Internal Revenue Service. About Form 1096, Annual Summary and Transmittal of U.S. Information Returns
State Filing
Many states want their own copy. If you e-file through IRIS or FIRE, the IRS’s Combined Federal/State Filing program can forward 1099-NEC data to participating states automatically.17Internal Revenue Service. Combined Federal/State Filing (CF/SF) Program Not every state participates, and some have their own deadlines or added requirements. Check each state where your contractors work.
The January 31 Deadline
Form 1099-NEC has a single unified deadline. By January 31 of the year following payment, both Copy B to the contractor and Copy A to the IRS have to be done. If January 31 falls on a weekend or federal holiday, the deadline moves to the next business day.3Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
Extension options are narrow. You can request a 30-day extension on Form 8809, but it is not automatic. You have to explain in writing why you need more time, and only one 30-day extension is available for 1099-NEC. Even an approved extension applies only to the IRS filing. The January 31 deadline for getting Copy B to the contractor does not move.18IRS.gov. Form 8809 Application for Extension of Time To File Information Returns
Penalties
The IRS assesses separate penalties for failing to file correct returns with the IRS and for failing to furnish correct statements to recipients. Per-form amounts for 2026 are tiered by how late the filing is:19Internal Revenue Service. Information Return Penalties
- Up to 30 days late: $60 per form
- 31 days late through August 1: $130 per form
- After August 1 or never filed: $340 per form
- Intentional disregard: $680 per form with no annual cap
Annual maximum caps apply for failures that aren’t intentional, and businesses with gross receipts of $5 million or less get lower caps.20Office of the Law Revision Counsel. 26 U.S. Code 6721 – Failure To File Correct Information Returns A business with 50 unfiled 1099-NECs that misses the deadline entirely faces up to $17,000 in penalties, and that’s before the separate penalty for not furnishing recipient statements.
The IRS will consider reasonable cause. If you can show you acted responsibly, tried to prevent the failure, and corrected it as fast as possible, the penalty may be reduced or waived. First-time filers, documented system failures, and natural disasters carry weight. Respond to the penalty notice within 45 days with your explanation.21Internal Revenue Service. Penalty Relief for Reasonable Cause
Fixing a Filed Form
Corrections filed within 30 days of the original due date face only the $60 per-form penalty rather than the higher tiers, so move quickly once you spot a problem.19Internal Revenue Service. Information Return Penalties
The method depends on what’s wrong.
For a wrong dollar amount, code, or checkbox (a Type 1 error), prepare a new 1099-NEC with the correct information, check the “CORRECTED” box at the top, and include all other data as it appeared on the original. Submit that single corrected form to the IRS and send an updated copy to the contractor.22Internal Revenue Service. General Instructions for Certain Information Returns (2025)
For a wrong TIN, wrong name, or wrong form type (a Type 2 error), you need two forms. First, submit a form with the “CORRECTED” box checked that matches the original incorrect return exactly, but with all dollar amounts zeroed out; this cancels the original record. Second, submit a brand-new form without the “CORRECTED” box containing all the correct information, as though filing for the first time. On paper, note “Filed To Correct TIN,” “Filed To Correct Name,” or “Filed To Correct Return” in the bottom margin of the accompanying Form 1096.22Internal Revenue Service. General Instructions for Certain Information Returns (2025)
The instinct with a Type 2 error is to submit one corrected form carrying the right name or TIN. That won’t process. The IRS needs the zeroed-out version to cancel the original before it can accept the replacement.