If you earned less than $600 from a client in 2026 or later, you almost certainly will not get a 1099 — and under the old rules you might not have either, because the reporting threshold has actually gone up. For payments made after December 31, 2025, a business only has to send you a Form 1099-NEC if it paid you at least $2,000 during the year.1Office of the Law Revision Counsel. 26 USC 6041 – Information at Source The old $600 figure that freelancers memorized for years no longer applies. What has not changed is the tax itself: every dollar you earned is still taxable, whether or not a form ever shows up in your mailbox.
The $600 Rule Is Gone
For decades, any business that paid a non-employee $600 or more for services in a calendar year had to file Form 1099-NEC with the IRS and send a copy to the worker. The One, Big, Beautiful Bill Act raised that number to $2,000 for all payments made after December 31, 2025.1Office of the Law Revision Counsel. 26 USC 6041 – Information at Source Starting in 2027, the $2,000 figure will adjust annually for inflation.
The same $2,000 threshold now applies to most categories on Form 1099-MISC, including rents, prizes, awards, and other income payments.2Internal Revenue Service. Form 1099 NEC and Independent Contractors The mechanics work the way they always did: the payer totals every payment it made to you during the year, and it only has to file a form if that total hits the threshold. If a single client paid you $1,800 across a handful of invoices, that client has no obligation to send you or the IRS a 1099.
The reporting duty belongs to the business paying you, not to you. So if you are under the threshold with every client, expect a quiet January.
You Still Owe Tax on Every Dollar
The threshold controls paperwork, not taxability. Federal tax law defines gross income as all income from whatever source, which means every dollar you earned from freelancing, gig work, side projects, and cash tips counts — including amounts well below $600 or $2,000.2Internal Revenue Service. Form 1099 NEC and Independent Contractors If you earned $800 from one client and never receive a 1099, you still put that $800 on your tax return.
The absence of a form does not mean the income is invisible to the IRS. Bank records, payment-app data, and information from other parties can all surface during an audit. Skipping small amounts can lead to underpayment penalties and interest on what you should have paid.
Hobby Income Versus Business Income
If your small-dollar earnings come from something you do not run as a business, such as occasional craft sales or a weekend side project, the IRS may classify the income as hobby income. You still report it, but it goes on Schedule 1 (Form 1040) rather than Schedule C.3Internal Revenue Service. Know the Difference Between a Hobby and a Business The trade-off is that hobby expenses cannot be deducted against that income. If you run the activity like a business — keeping records, advertising, and trying to earn a profit — you can file Schedule C and deduct ordinary business expenses.
When a Small Payment Can Still Trigger a 1099
A handful of situations can produce a 1099 even when the total payment falls below the $2,000 service-payment threshold.
- Backup withholding. If you did not give the payer a correct taxpayer identification number, or the IRS notified the payer that your number is wrong, the payer must withhold 24% of the payment and report it on a 1099 regardless of amount. This makes sure you get credit for the tax already sent to the IRS on your behalf.4Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
- Royalties. Form 1099-MISC must be issued for royalties of $10 or more. The recent legislation did not change that threshold.5Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
- Interest income. Banks and other financial institutions file Form 1099-INT for interest of $10 or more.6Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026)
- Voluntary filing. Some businesses issue 1099s for payments below the threshold to simplify their own bookkeeping. Nothing prevents them from doing so.
If any of these forms arrive, the amount shown must match what you put on your return. The IRS cross-checks 1099 data against filed returns, and a mismatch can trigger a notice.
Payments received through apps like Venmo, PayPal, or Cash App for goods or services follow a separate track on Form 1099-K, which has its own thresholds and rules.7Internal Revenue Service. Treasury, IRS Issue Proposed Regulations Reflecting Changes From the One, Big, Beautiful Bill to the Threshold for Backup Withholding on Certain Payments Made Through Third Parties Not getting a 1099-NEC does not mean you will not get a 1099-K.
Self-Employment Tax Starts at $400
Beyond regular income tax, self-employment earnings are subject to Social Security and Medicare taxes. You owe self-employment tax once your net earnings from self-employment reach $400 for the year.8Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) Net earnings means your gross income minus allowable business expenses, so if you earned $900 but spent $550 on supplies, your net is $350 and no self-employment tax is due.
The $400 self-employment tax threshold is completely separate from the $2,000 reporting threshold for 1099s. You can owe self-employment tax without ever receiving a 1099, and you can receive a 1099 without owing self-employment tax if your expenses bring your net below $400. You calculate the tax on Schedule SE (Form 1040), and you can deduct the employer-equivalent portion when figuring your adjusted gross income.8Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) This is where many people earning small amounts from side work get caught off guard: no 1099, but tax still owed.
How to Report Income Without a 1099
When you earn self-employment income and no 1099 arrives, you report it on Schedule C (Form 1040). All gross receipts from your trade or business go on Line 1, whether or not any payer issued a form. You then subtract your business expenses to arrive at a net profit or loss, which flows to your main tax return.9Internal Revenue Service. Self-Employed Individuals Tax Center
Allowable deductions include supplies, software, advertising, mileage, and a portion of home-office costs if you use part of your home exclusively for work. These deductions reduce both your taxable income and your self-employment tax base. You can claim them regardless of whether a 1099 was issued; the form only affects the payer’s reporting obligation, not your right to deduct legitimate expenses.
Keep Your Own Records
Without a 1099, your own records are the only proof of what you earned and what you spent. Keep bank statements, digital payment confirmations, invoices, and receipts organized by client or by month. Each record should show the date, amount, and source of the payment.
The IRS generally requires you to keep tax records for at least three years from the date you filed the return. If you underreport income by more than 25% of the gross income shown on your return, the IRS has six years to assess additional tax, so holding records longer gives you extra protection.10Internal Revenue Service. How Long Should I Keep Records Good records are your best defense in an audit and the easiest way to make sure your Schedule C numbers are right from the start.