When to Send a 1099 to Someone: Forms, Deadlines, and Penalties

Send a 1099 to someone when your business paid that person (or their unincorporated entity) $600 or more during the calendar year for services, rent, prizes, legal fees, or certain other non-merchandise payments. The form goes to the recipient by January 31, and a copy goes to the IRS on the same date for Form 1099-NEC or slightly later for Form 1099-MISC. Personal payments never require a 1099, and payments to most corporations don’t either. Knowing when to send a 1099 to someone comes down to four questions: was the payment made in a trade or business, did it hit $600, what kind of entity received it, and did it flow through a payment platform.

The $600 Business-Payment Trigger

The obligation only attaches to payments made in the course of a trade or business, meaning an activity you run for profit.¹ Hiring a plumber for your office is a business payment. Hiring the same plumber for your home kitchen is not, and no form is owed. Cash gifts to relatives, pet-sitting money to a neighbor, splitting dinner with a friend — all personal, all outside 1099 reporting.

For most 1099 filings, the trigger is $600 or more paid to a single recipient during the calendar year.² The figure is cumulative. Ten payments of $60 to the same contractor cross the line just as surely as one $600 invoice. A few categories use lower floors — royalties trigger at $10, and interest and dividends are generally reportable at $10 as well.³

Payments for physical merchandise do not require a 1099-NEC.⁴ Buying $5,000 in office supplies from a vendor generates no form. When a contractor bundles labor and materials — say, a web developer who also buys hosting on your behalf — the full payment is reportable because the materials are part of the service.

A separate boundary: if the person doing the work is your employee rather than an independent contractor, they get a W-2, not a 1099. Misclassifying a worker can leave you liable for unpaid employment taxes, so if the answer isn’t obvious, the IRS provides Form SS-8 to request an official determination.⁵

Who You Don’t Send a 1099 To

Payments to a corporation — C-corp or S-corp — are generally exempt from 1099 reporting.² Two carve-outs override that exemption:

Legal services. Payments of $600 or more to attorneys or law firms must be reported regardless of incorporation. Attorney fees go in Box 1 of Form 1099-NEC; gross legal proceeds go in Box 10 of Form 1099-MISC.⁴
Medical and health care payments. Payments of $600 or more to physicians, hospitals, and other providers must be reported on Form 1099-MISC (Box 6) even when the provider is a professional corporation. Tax-exempt hospitals and government-owned medical facilities are exempt.⁴

LLCs Are Not Automatically Exempt

The corporate exemption doesn’t extend to every LLC. An LLC’s tax treatment depends on how it elected to be classified. A single-member LLC is a “disregarded entity” for federal tax purposes, and its owner should provide a Social Security Number or personal EIN on Form W-9, not the LLC’s own EIN.⁶ You send a 1099 to a single-member LLC and to a multi-member LLC taxed as a partnership. Only LLCs that elected to be taxed as a C-corp or S-corp fall inside the corporate exemption. The W-9 your vendor completes has a tax-classification checkbox — read it before the first payment.

Foreign Contractors

Non-U.S. persons don’t get a 1099. Instead, request a Form W-8BEN (or the appropriate W-8 variant) and report payments on Form 1042-S. Payments to foreign contractors for U.S.-sourced services are generally subject to 30% withholding unless a tax treaty reduces the rate.⁷ If you can’t tell whether a payee is a U.S. or foreign person, the default is to treat them as a U.S. person and apply backup withholding.

Which 1099 Form Fits the Payment

1099-NEC for Services

Form 1099-NEC covers payments of $600 or more for services performed by someone who isn’t your employee: freelancers, consultants, subcontractors, and other non-employee service providers.⁴ A $2,000 graphic designer or an $800 bookkeeper each gets a 1099-NEC.

1099-MISC for Rent, Royalties, and Other Payments

Form 1099-MISC handles what NEC doesn’t: rent of $600 or more, royalties of $10 or more, prizes and awards, medical and health care payments, and gross proceeds paid to attorneys.⁸ If your business pays $12,000 a year for office space to an individual landlord, that goes on a 1099-MISC.

When the Payment Went Through a Platform

When you pay a contractor through PayPal, Venmo, or a credit card processor, the payment processor reports it on Form 1099-K, not you. Under the One, Big, Beautiful Bill Act signed in July 2025, the third-party payment network threshold reverted to more than $20,000 in gross payments and more than 200 transactions per payee per year.⁹

The rule that matters for you as the payer: if a payment qualifies for reporting on both a 1099-NEC and a 1099-K, report it only on the 1099-K.¹⁰ Don’t double-report. If some payments to a contractor went through a platform and others went by check, you still issue a 1099-NEC for the checks if they hit $600 on their own.

Collect the W-9 Before You Pay

Before you cut the first check, get a completed Form W-9 from the payee. It gives you the recipient’s legal name, business name, tax classification, and Taxpayer Identification Number (a Social Security Number or Employer Identification Number).¹¹ Chasing this information down in January, after the work is done and the vendor has moved on, is the classic 1099 headache.

If the name and TIN on a W-9 don’t match IRS records, you may receive a CP2100 or CP2100A notice — a “B Notice” — requiring backup withholding on future payments at 24%.¹²¹³ Keep every signed W-9 on file. It’s your documentation if the IRS ever questions a filing.

Filing Deadlines

Form 1099-NEC: due to the recipient and to the IRS by January 31, whether you file on paper or electronically.⁴
Form 1099-MISC: due to the recipient by January 31; due to the IRS by February 28 on paper or March 31 electronically.⁴

If a due date lands on a weekend or legal holiday, the deadline moves to the next business day. The recipient’s copy is always due January 31 regardless of form.

How to File

Beginning with tax year 2026, the IRS Information Returns Intake System (IRIS) is the sole electronic filing platform for information returns. The older FIRE system is being retired for filing season 2027.¹⁴ IRIS is a free web portal. You can enter forms one at a time, upload them in bulk by CSV, and download payee copies to distribute.¹⁵

If you file 10 or more information returns in a year, counting all types (W-2s included), electronic filing is mandatory.¹⁵ Businesses filing fewer than 10 may still use paper, but must include Form 1096 as a transmittal cover sheet totaling the attached 1099s.¹⁶ File a separate 1096 for each type of 1099 — one for your 1099-NECs, another for your 1099-MISCs.

Keep copies of every filed form and submission confirmation for at least three years.¹⁷ Many states also require 1099 filings, and the IRS Combined Federal/State Filing Program forwards electronically filed forms to participating states automatically; states that don’t participate may need a separate submission on their own schedule.¹⁸

Penalties for Missing or Wrong Filings

The IRS penalizes each information return or payee statement filed late or with incorrect information. For returns due in 2026, the per-form penalty scales with how long it takes you to fix the problem:¹⁹

Up to 30 days late: $60 per form.
31 days late through August 1: $130 per form.
After August 1 or not filed: $340 per form.
Intentional disregard: $680 per form, no annual cap.

Small businesses with average annual gross receipts of $5 million or less get lower annual caps: $239,000 at the earliest tier, $683,000 at the middle tier, and $1,366,000 at the latest tier. Larger businesses face higher maximums. The IRS may waive penalties for reasonable cause, which generally means showing that you acted responsibly before and after the error — for example, by requesting extensions, correcting quickly, and maintaining a good compliance history.²⁰ Not knowing the rule doesn’t qualify.

Fixing a 1099 After You’ve Sent It

If you spot an error on a 1099 you already filed, correct it as soon as possible. Corrections filed within 30 days of the original due date fall into the lowest penalty tier. The process depends on the mistake.³

Wrong Dollar Amount

Prepare a new form with the correct amount, check the “CORRECTED” box at the top, and fill in every other field exactly as it appeared on the original. Submit it with a new Form 1096 (paper) or through IRIS (electronic). Don’t resubmit the original incorrect form.

Wrong TIN or Name

This one needs two forms. First, prepare a form with the “CORRECTED” box checked that matches the original exactly — same name, same TIN — but enter zero for every dollar amount. That cancels the original. Second, prepare a new form without the “CORRECTED” box, entering all the correct information as if it were an original filing. Submit both together with a Form 1096 noting “Filed To Correct TIN” or “Filed To Correct Name” in the bottom margin. If you filed the original electronically, the corrections must go in electronically as well.

1
Office of the Law Revision Counsel. 26 USC 6041 – Information Returns by Persons Making Certain Payments
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Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return?
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Internal Revenue Service. General Instructions for Certain Information Returns
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
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Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
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Internal Revenue Service. Single Member Limited Liability Companies
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Internal Revenue Service. Forms and Associated Taxes for Independent Contractors
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Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
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Internal Revenue Service. One, Big, Beautiful Bill Provisions
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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. Instructions for the Requester of Form W-9
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Internal Revenue Service. Backup Withholding B Program
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Internal Revenue Service. Fast Facts to Help Taxpayers Understand Backup Withholding
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Internal Revenue Service. Filing Information Returns Electronically (FIRE)
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Internal Revenue Service. E-File Information Returns With IRIS
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Internal Revenue Service. About Form 1096, Annual Summary and Transmittal of U.S. Information Returns
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Internal Revenue Service. How Long Should I Keep Records?
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Internal Revenue Service. Combined Federal/State Filing (CF/SF) Program
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Internal Revenue Service. Information Return Penalties
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Internal Revenue Service. Penalty Relief for Reasonable Cause