When Are You Required to Issue a 1099: Thresholds, Forms, and Deadlines

For the 2026 tax year, you are required to issue a 1099 when you pay $2,000 or more to a single non-employee in the course of your trade or business.¹ That threshold jumped from $600, which applied in prior years. A handful of payment categories still trigger a filing at lower amounts, and some recipients are excluded no matter how much you paid them. The rules below tell you which payments count, which form to use, and when the forms are due.

The $2,000 Threshold and What It Covers

Beginning with tax year 2026, the general minimum for most 1099 reporting is $2,000 in cumulative payments to one recipient during the calendar year.¹ Ten $200 payments to the same contractor cross the line just as clearly as one $2,000 check. Starting in 2027, the $2,000 figure will be adjusted annually for inflation.

The $2,000 threshold covers most categories reported on Form 1099-NEC and Form 1099-MISC: nonemployee compensation, rents, prizes, awards, medical and healthcare payments, and crop insurance proceeds.

Only payments made in the course of a trade or business count. Paying a plumber $2,500 to fix your personal home does not trigger a 1099. Paying that same plumber $2,500 to work on your rental property does.

Several categories keep their own thresholds:

Royalties: $10 or more, on Form 1099-MISC.
Gross proceeds paid to attorneys: $600 or more, on Form 1099-MISC (Box 10).²
Direct sales of consumer products for resale: $5,000 or more, on Form 1099-MISC.³
Fishing boat crew payments and fish purchases: various lower thresholds, on Form 1099-MISC.

Which Form to Use

Form 1099-NEC for Services

Use Form 1099-NEC when you pay $2,000 or more to someone who is not your employee for services performed in your trade or business.⁴ This covers fees paid to freelancers, independent contractors, and consultants. The total goes in Box 1.² Parts and materials the contractor supplies as part of the job are included in the total. Hire a graphic designer as an independent contractor and pay them $2,400 across the year? That’s a 1099-NEC.

Form 1099-MISC for Rent, Royalties, and Other Payments

Form 1099-MISC covers business payments that are not compensation for services:³

Rents (Box 1): $2,000 or more for office space, equipment, or other business rentals to unincorporated landlords.
Royalties (Box 2): $10 or more.
Other income (Box 3): prizes, awards not tied to services, and other miscellaneous payments of $2,000 or more.
Medical and healthcare payments (Box 6): $2,000 or more to physicians or medical providers.
Gross proceeds to attorneys (Box 10): $600 or more paid in connection with legal services, such as settlement proceeds.²

Attorney Payments Follow Two Different Rules

Legal fees you pay a lawyer for advice or representation go on Form 1099-NEC at the $2,000 threshold. Settlement proceeds that pass through an attorney’s trust account go on Form 1099-MISC in Box 10 at the $600 threshold. Both rules apply whether or not the attorney’s practice is incorporated.⁵

Recipients and Payments That Don’t Require a 1099

Corporations

Payments to C-corporations and S-corporations generally do not require a 1099.⁶ The two exceptions are medical and healthcare payments and payments to attorneys, both of which must be reported even when the recipient is incorporated.⁵

Payments Through Credit Cards or Apps

Payments made by credit card or through a third-party network like PayPal or Venmo are excluded from 1099-NEC and 1099-MISC reporting. The payment processor reports those amounts on Form 1099-K instead, once the payee crosses $20,000 in gross payments and more than 200 transactions during the year.⁷ This split prevents the same income from being reported twice.⁸

Foreign Contractors

A non-U.S. person paid for services does not get a standard 1099. You may need to withhold tax and report the payment on Form 1042-S instead.⁹ Collect a Form W-8BEN rather than a W-9 to document the payee’s foreign status.

Other Excluded Payments

Purchases of merchandise, freight charges, and utility payments such as phone or internet service are not reportable on a 1099. Wages paid to your employees go on Form W-2, not a 1099.

Collect a W-9 Before You Pay

Request a completed Form W-9 before making the first payment to any contractor or vendor. The W-9 gives you the legal name, address, tax classification, and taxpayer identification number you’ll need in January.¹⁰ For individuals the TIN is usually a Social Security Number; for business entities it’s an Employer Identification Number.¹¹

The tax classification box tells you whether the recipient is exempt. If the vendor checks “C Corporation” or “S Corporation,” you generally do not need to file a 1099 (medical and legal payments aside).

If a payee refuses to provide a TIN or gives you one that appears incorrect, you may be required to withhold 24 percent of future payments and remit it to the IRS. Backup withholding continues until the payee provides a valid TIN, and any amount withheld goes on the 1099 so the payee can claim credit for it.¹²

Filing Deadlines

Form 1099-NEC: recipient copy and IRS copy both due January 31, whether you file on paper or electronically.²
Form 1099-MISC recipient copy: due January 31.
Form 1099-MISC IRS copy: due February 28 on paper, March 31 electronically.

If you file 10 or more information returns of any type during the year (1099s, W-2s, and others combined), you must file all of them electronically.¹³ The IRS offers a free portal, IRIS, that handles up to 100 returns at a time.¹⁴

Need more time? File Form 8809 by the original due date. For Form 1099-MISC the initial 30-day extension is automatic. For Form 1099-NEC it isn’t: you have to submit a paper Form 8809 with a written justification, and only one 30-day extension is allowed.¹⁵

Penalties for Missing the Requirement

The IRS charges separate penalties for failing to file with the IRS and for failing to furnish a statement to the payee, so one missed 1099 can produce two penalty assessments. For 2026 the per-form amounts are:¹⁶

Filed up to 30 days late: $60 per form.
Filed 31 days late through August 1: $130 per form.
Filed after August 1 or not filed at all: $340 per form.
Intentional disregard: $680 per form, with no annual cap.

Annual caps limit total penalties for filers not acting with intentional disregard, with lower caps for smaller businesses. If you have reasonable cause for the failure and can show you acted responsibly before and after the problem, you can request penalty relief.¹⁷ A small-dollar error on a filed return may also fall under the de minimis safe harbor: if the reported amount is off by no more than $100 (or $25 for a withholding amount), the IRS generally will not impose a penalty unless the payee elects out.

1
Internal Revenue Service. General Instructions for Certain Information Returns (2026)
2
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
3
Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
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Internal Revenue Service. About Form 1099-NEC, Nonemployee Compensation
5
Internal Revenue Service. Information Returns (Forms 1099)
6
Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return
7
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold
8
Internal Revenue Service. What to Do With Form 1099-K
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Internal Revenue Service. About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding
10
Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
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Internal Revenue Service. Form W-9, Request for Taxpayer Identification Number and Certification
12
Internal Revenue Service. Backup Withholding
13
Internal Revenue Service. Who Must File Information Returns Electronically
14
Internal Revenue Service. E-File Information Returns With IRIS
15
Internal Revenue Service. Form 8809, Application for Extension of Time to File Information Returns
16
Internal Revenue Service. Information Return Penalties
17
Internal Revenue Service. Penalty Relief for Reasonable Cause