How to Issue a 1099-NEC to a Contractor
Paid a contractor enough this year? You probably owe them a 1099-NEC: 600 dollars or more for 2025 payments, rising to 2,000 dollars for payments made in 2026. Here is who needs one, why you should collect a W-9 first, the two traps that cause double-reporting, and the January 31 deadline.
If you paid a non-employee for services in your business, you likely owe them a 1099-NEC, due January 31 to both the contractor and the IRS. Collect a W-9 before you pay anyone so the form nearly fills itself.
Key takeaways
- The reporting threshold is 600 dollars total for the year for payments made through 2025, and it rises to 2,000 dollars for payments made starting in 2026.
- Collect a Form W-9 up front to capture each contractor's legal name, address, and taxpayer ID.
- Do not issue a 1099-NEC for payments made by credit card or a service like PayPal; the processor reports those on a 1099-K, and doubling up double-reports the income.
- Most corporations do not get a 1099-NEC, but attorneys do even when incorporated, and missing the January 31 deadline brings escalating per-form penalties.
If your business paid a freelancer or contractor during the year, you may owe them, and the IRS, a 1099-NEC. It is not complicated, but it has a deadline and a couple of traps, and getting it right starts long before tax season. Here is how to issue a 1099-NEC without scrambling in January.
Who needs a 1099-NEC
The basic rule: if you paid a non-employee enough during the year for services as part of running your business, you file a 1099-NEC reporting what you paid them. The threshold is 600 dollars for 2025 payments and rises to 2,000 dollars for payments made in 2026. That covers most independent contractors, freelancers, and subcontractors. Employees are different, they get a W-2. Our guide on who gets a 1099-NEC walks through the edge cases.
Get the W-9 first
The single best habit is collecting a Form W-9 from every contractor before you pay them the first dollar. It captures their legal name, address, and taxpayer ID, which is exactly what you need to issue the 1099 later. Chasing that information in January, after the work is done and the contractor has moved on, is how businesses miss the deadline. Get it up front and the year-end form nearly fills itself.
Two traps to avoid
- Payments to most corporations do not need a 1099-NEC, but payments to attorneys do, even incorporated ones.
- If you paid by credit card or a service like PayPal, do not issue a 1099-NEC for it. The processor reports that on a 1099-K, and reporting it twice overstates what the contractor was paid.
- The threshold is the total you paid for the year, not per payment.
The deadline, and what's changing
You have to get the 1099-NEC to both the contractor and the IRS by January 31. Missing it brings per-form penalties that climb the longer you wait, so the date is worth a calendar reminder. One change to know: the 600 dollar threshold that applied for years still governs your 2025 payments, but the 2025 tax law raised it to 2,000 dollars starting with payments you make in 2026. So for 2026 payments, 2,000 dollars is the line.
1099 season without the scramble
Keep your contractors' details and payments tracked all year so generating their 1099-NEC forms is a few clicks in January, not a frantic hunt.
Start freeHow Vuuv helps
Vuuv keeps the 1099 process organized from both ends. You can store each contractor's W-9 details and tax ID, and track what you pay them across the year, so you always know who crossed the 600 dollar line. At tax time Vuuv generates 1099-NEC forms from those records, ready to print and send, on the Pro and Elite plans. It prepares the forms for you to file, rather than e-filing them with the IRS on your behalf, so you stay in control of what goes out.
Frequently asked questions
Who needs to receive a 1099-NEC?
Any non-employee you paid enough during the year for services as part of running your business: 600 dollars or more for 2025 payments, rising to 2,000 dollars for payments made in 2026. That covers most independent contractors, freelancers, and subcontractors. Employees get a W-2 instead. The threshold is the total you paid them for the year, not a per-payment amount.
Do I need a W-9 to issue a 1099?
You need the information on it, so collect a Form W-9 from every contractor before you pay them the first dollar. It captures their legal name, address, and taxpayer ID, which is exactly what the 1099 requires. Getting it up front means the year-end form nearly fills itself, instead of chasing details in January.
When are 1099-NEC forms due?
By January 31, to both the contractor and the IRS. Missing the deadline brings per-form penalties that climb the longer you wait, so it is worth a calendar reminder. Collecting W-9s early in the year is the single best way to make sure you hit the date.
Do I issue a 1099 for payments made by credit card or PayPal?
No. Payments made by credit card or through a third-party network like PayPal are reported by the processor on a 1099-K, so issuing your own 1099-NEC for the same amount would double-report it. Also note that payments to most corporations do not need a 1099-NEC, though payments to attorneys do even when incorporated.
Related articles
This article is general information, not tax advice. Tax rules change and every situation is different. Confirm the details against current IRS guidance or talk to a qualified tax professional before you file.