Who Do I Send a 1099 To? Thresholds, Exemptions, and W-9s

For the 2026 tax year, you generally send a 1099 to any non-employee, non-corporate person or business you paid $2,000 or more during the calendar year for services performed in the course of your trade or business.¹ That captures most independent contractors, freelancers, consultants, partnerships, and single-member LLCs you hire. A handful of payment types (attorney fees, medical payments, rent, royalties) follow their own rules, and some payees you might expect to receive a 1099 are actually exempt. The sections below walk through each group so you know exactly who on your vendor list needs a form.

The Core Rule: Non-Employee Service Providers Paid $2,000 or More

If someone performed services for your business during the year, is not your employee, and you paid them $2,000 or more in total, they get a 1099.¹ The $2,000 threshold is a significant jump from the longstanding $600 floor, and it applies to the aggregate paid across the year, not any single invoice.

The payees most commonly caught by this rule include independent contractors, freelance designers, writers, bookkeepers, IT consultants, cleaning services, repair technicians, and other outside professionals. It also reaches partnerships, estates, and limited liability companies that haven’t elected corporate tax treatment.

One qualifier does a lot of work here: the payment must be made in the course of your trade or business. If you personally pay a plumber $3,000 to fix the sink at your home, no 1099 is required, because the payment isn’t a business expense.¹ The obligation only attaches to payments connected to your business activity.

Payments That Follow Their Own Thresholds

A few categories don’t follow the ordinary $2,000 service rule.

Attorneys and law firms. Payments to a lawyer or law firm for legal services require a 1099 regardless of entity type. The usual corporate exemption does not apply, so even an incorporated firm receives a 1099 when paid for legal work.²

Medical and healthcare providers. Medical and healthcare payments made in the course of your business follow the $2,000 threshold and must be reported even when the recipient is a corporation, including a professional corporation.³

Rent. Rent paid for office space, equipment, or other business property follows the $2,000 threshold.² If you lease space from an individual landlord and pay above that floor, you owe them a 1099.

Royalties. Royalty payments trigger a 1099-MISC at just $10 for the year, the lowest threshold in the system.²

Who You Do Not Send a 1099 To

Several common payees are off the list, and knowing why keeps you from filing forms that shouldn’t exist.

Corporations. Most C-corporations and S-corporations do not receive 1099s. If a vendor indicates corporate status on their W-9, you can skip the form, unless the payment was for legal services or for medical and healthcare services, which must be reported regardless of entity type.²

Payments for goods. Buying merchandise is not reportable, even if you spend well above the threshold with a single supplier. The same goes for freight, telephone service, and storage.⁴ The distinction matters when a vendor supplies both. If a contractor bills you $3,000 for labor and $1,500 for materials on separate line items, only the $3,000 service portion counts toward 1099 reporting.

Anything paid by credit card, debit card, or third-party payment app. Payments processed through credit or debit cards, or through platforms like PayPal and Venmo, get reported by the payment processor on Form 1099-K instead.⁵ You do not also issue a 1099-NEC for the same transaction. If you paid a contractor entirely by business credit card, they don’t get a form from you. Double-reporting the same payment is one of the most common filing mistakes.

Employees. Wages paid to employees go on Form W-2, not a 1099. The 1099 system is for non-employee payments by design.

How to Confirm Whether a Vendor Qualifies

Before you cut the first check, request a completed Form W-9. The W-9 gives you the payee’s legal name, address, taxpayer identification number (a Social Security Number for individuals or an Employer Identification Number for businesses), and, critically, the entity classification box that tells you whether a 1099 is required at all.⁶

Read that entity line carefully. A box checked for C-corporation or S-corporation generally takes the vendor off your 1099 list, with the legal and medical exceptions already noted. A single-member LLC that hasn’t elected corporate status is treated as a sole proprietorship for tax purposes and receives a 1099 like any other individual payee.⁷ An LLC with partnership tax treatment also receives a 1099. The LLC label alone doesn’t tell you the answer; the tax classification does.

The IRS runs a free TIN Matching Program through its e-Services portal that verifies name-and-TIN combinations before you file. The interactive option handles up to 25 lookups with instant results, and the bulk option processes up to 100,000 combinations within 24 hours.⁸ Running your vendor list through the tool before filing season surfaces mismatches early.

When a Payee Refuses to Give You a W-9

If a payee you’ve identified as 1099-eligible won’t hand over a W-9, or gives you a TIN that’s obviously incorrect, the compliance burden shifts to you. You must begin backup withholding at 24% of all future payments to that person and remit the withheld amount to the IRS.⁹ This isn’t optional. For a missing or clearly wrong TIN, backup withholding begins immediately, and you’re expected to make up to three solicitation attempts to obtain a correct number.

If the IRS later identifies a TIN mismatch on a form you filed, you’ll receive a CP2100 or CP2100A notice. You then send the payee a “B” Notice with a blank W-9. A second CP2100 notice for the same payee within three years triggers a second B Notice, and this time the payee has to provide a copy of their Social Security card or an IRS Letter 147C verifying their EIN before withholding can stop.¹⁰ The practical lesson: collect the W-9 before the first payment, not after.

Picking the Right 1099 for the Payee

Once you know a payee gets a 1099, the next question is which one. For most businesses, the choice is between the 1099-NEC and the 1099-MISC, and the line is cleaner than people expect.

Form 1099-NEC covers nonemployee compensation: payments for services performed by someone who is not your employee. A graphic designer, a bookkeeper, an IT consultant, a cleaning crew owner-operator — all 1099-NEC. Attorney fees paid for legal services also go on 1099-NEC, in Box 1.²

Form 1099-MISC handles the other reportable payment types: rent in Box 1, royalties in Box 2, prizes and awards in Box 3, medical and healthcare payments in Box 6, and gross proceeds paid to an attorney (such as settlement funds routed through a lawyer’s trust account) in Box 10.³

The attorney distinction is the one that trips people up. Paying a lawyer for work done on your behalf is nonemployee compensation and goes on 1099-NEC. Paying settlement funds that happen to pass through a lawyer’s account on the way to a claimant is gross proceeds and goes on 1099-MISC. Same payee, different form, driven entirely by what the payment is for.

With your vendor list sorted into these buckets — payees who get a 1099-NEC, payees who get a 1099-MISC, and payees who get nothing at all — the mechanical part of filing follows a known path. The hard work is upstream, in the W-9 you collected and the entity classification you confirmed before the money went out the door.

1
Internal Revenue Service. Form 1099 NEC and Independent Contractors
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
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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. Instructions for Forms 1099-MISC and 1099-NEC (PDF)
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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. About Form W-9, Request for Taxpayer Identification Number and Certification
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Internal Revenue Service. Single Member Limited Liability Companies
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Internal Revenue Service. Taxpayer Identification Number (TIN) Matching Tools
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Internal Revenue Service. Backup Withholding
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Internal Revenue Service. Backup Withholding B Program