Business operations
1099-NEC Filing Requirements: Who Gets One, When It's Due, and What Happens If You Miss It
Businesses must issue a 1099-NEC to every contractor, freelancer, or unincorporated vendor paid $600 or more in a year. The January 31 deadline is firm, penalties are tiered and escalate quickly, and 'I didn't know' isn't a defense.
Written by Matt Reese, CPA · 7 min read · Published April 2026·Share on LinkedIn
Key Takeaways
- You must issue a 1099-NEC to any individual, sole proprietor, partnership, or LLC taxed as a sole prop that you paid $600 or more for services during the year. Corporations (S-corps and C-corps) are generally exempt.
- The deadline is January 31 — for both the copy to the recipient and the filing with the IRS. There is no extension available for recipient copies.
- Penalties start at $60 per form for late filing and escalate to $330 per form for intentional disregard. A business that misses 20 forms faces potential exposure of $6,600+.
- Collect W-9s before you pay vendors — not at year-end when you're scrambling. A W-9 gives you the legal name, address, EIN/SSN, and entity type you need to file accurately.
Who must receive a 1099-NEC
You must issue a 1099-NEC to every person or unincorporated business to whom you paid $600 or more for services during the calendar year, in the course of your trade or business. This includes:
- Independent contractors and freelancers (web designers, bookkeepers, consultants)
- Sole proprietors paid for services
- Partnerships paid for services
- Single-member LLCs and multi-member LLCs not taxed as a corporation
- Attorneys — even if incorporated (an important exception)
Who is generally exempt from receiving a 1099-NEC:
- C-corporations and S-corporations (with the attorney exception above)
- Payments for merchandise, inventory, freight, or storage (services only trigger 1099s)
- Payments made via credit card or third-party payment network (PayPal, Venmo Business — those trigger 1099-K from the processor)
- Employees (those get W-2s)
The $600 threshold is cumulative. It’s not per invoice — it’s the total paid to that vendor over the calendar year. Twelve $55 payments total $660 and trigger a 1099.
Key deadlines
| Form | Recipient copy due | IRS filing due (paper) | IRS filing due (e-file) |
|---|---|---|---|
| 1099-NEC | January 31 | January 31 | January 31 |
| 1099-MISC (with box 7 data) | January 31 | January 31 | January 31 |
| 1099-MISC (no box 7) | January 31 | February 28 | March 31 |
| W-2 | January 31 | January 31 | January 31 |
The January 31 deadline for 1099-NEC is simultaneous — the recipient copy and the IRS filing are both due on the same day. There is no automatic extension available for recipient copies. If January 31 falls on a weekend, the deadline moves to the next business day.
No automatic extension for recipient copies
Penalties for missing the deadline
The IRS penalty structure for information returns (including 1099-NEC) is tiered by how late you file. The per-form amounts below apply to businesses with gross receipts over $5 million; lower caps apply to small businesses.
| How late | Penalty per form | Annual cap (large business) | Annual cap (small business) |
|---|---|---|---|
| Filed within 30 days | $60 | $630,500 | $220,500 |
| Filed Feb 1 – Aug 1 (31–180 days) | $130 | $1,891,500 | $630,500 |
| Filed after Aug 1 or not at all | $330 | $3,783,000 | $1,261,000 |
| Intentional disregard | $660 | No cap | No cap |
There’s a separate failure-to-furnishpenalty (same amounts) if you don’t get the recipient copy to the vendor on time. So a late form can generate two penalties — one for late IRS filing and one for late recipient furnishing — on the same form.
Filing late is meaningfully cheaper than not filing at all. If you missed January 31 but file before August 1, you're looking at $130/form instead of $330/form. File as soon as you realize the miss — don't wait until the next year-end cycle.
How to collect W-9s
The W-9 is the foundation of accurate 1099 filing. It gives you the vendor’s:
- Legal name — as it appears on their tax return (important for LLCs with a DBA)
- EIN or SSN — you can’t file a 1099 without this
- Entity type — tells you whether the exemption applies (LLC → look at the tax classification box)
- Address — for where to mail the recipient copy
Collect W-9s before the first payment — not in January when you’re assembling 1099s. If a vendor refuses to provide a W-9, you’re required to withhold backup withholding at 24% from each payment and remit it to the IRS. In practice, this usually prompts vendors to produce the form quickly.
Backup withholding is your leverage
How to file 1099-NECs
There are three common approaches for small business owners:
- Your payroll service (Gusto, ADP, Paychex): Most payroll platforms will prepare and e-file 1099-NECs for contractors you manage through the platform. Often the most seamless option if you’re already using payroll software.
- Tax preparation software (TurboTax Business, H&R Block, TaxAct): Most business tax software includes 1099 preparation. You enter the vendor information, it prepares the forms, and can e-file with the IRS.
- IRS FIRE system (Filing Information Returns Electronically): Direct e-filing with the IRS. Required if you’re filing 10 or more information returns in a calendar year starting in 2024. A FIRE account is free to set up.
- Paper filing: Only available if filing fewer than 10 forms. You must use official IRS forms (the red-ink version) — printing your own on plain paper does not scan correctly.
E-file threshold dropped to 10 forms in 2024
1099-NEC vs 1099-MISC: which form to use
| Payment type | Form to use | Box |
|---|---|---|
| Payments to contractors for services | 1099-NEC | Box 1 — Nonemployee compensation |
| Rent paid to individuals/partnerships | 1099-MISC | Box 1 — Rents |
| Royalties ($10+ threshold) | 1099-MISC | Box 2 — Royalties |
| Prizes and awards to non-employees | 1099-MISC | Box 3 — Other income |
| Gross proceeds to attorneys | 1099-MISC | Box 10 — Gross proceeds paid to an attorney |
| Attorney fees for legal services | 1099-NEC | Box 1 — Nonemployee compensation |
| Payments to a medical corporation | 1099-MISC | Box 6 — Medical and health care payments |
| Fishing boat proceeds | 1099-MISC | Box 5 |
The distinction between attorney fees (1099-NEC) and gross proceeds to attorneys (1099-MISC) trips up many businesses. If you paid an attorney for legal services — drafting a contract, a business dispute — that goes on 1099-NEC. If you paid an attorney who was acting as a settlement disbursement agent (the money flows through them to a claimant), that goes on 1099-MISC.
Building a year-round 1099 system
Businesses that scramble in January are ones that didn’t collect W-9s upfront. A simple system eliminates most of the friction:
- Require a W-9 before the first invoice is paid. Make it part of vendor onboarding — no W-9, no ACH setup.
- Flag vendors in your accounting software. QuickBooks and Xero have contractor tracking built in. Tag each vendor as “1099 eligible” when you set them up — this generates the 1099 report automatically at year-end.
- Run a 1099 eligibility report in November. Identify which vendors you’ve paid $600+ and confirm you have a current W-9 on file. Chase down any missing forms before January.
- File by January 20 if possible. Gives you 11 days of buffer before the January 31 deadline and time to fix errors if a form bounces back.
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Frequently asked
Questions owners actually ask
- Does an LLC get a 1099-NEC?
- It depends on how the LLC is taxed. A single-member LLC taxed as a sole proprietor gets a 1099-NEC. A multi-member LLC taxed as a partnership gets a 1099-NEC. An LLC that has elected S-corp or C-corp status is exempt — you confirm which by looking at the W-9 the vendor provides. If you didn't collect a W-9, you're guessing, which is why W-9 collection before payment matters.
- What if I paid a contractor via PayPal, Venmo, or credit card?
- Payments made through third-party payment networks like PayPal, Venmo Business, or credit cards are reportable by the payment processor (on Form 1099-K), not by you. You are not required to issue a 1099-NEC for payments made through these channels, even if the total exceeds $600. However, the contractor still owes tax on the income either way.
- I paid my attorney more than $600. Do attorneys get 1099s?
- Yes — attorneys are a notable exception to the corporation rule. Even if your attorney's firm is incorporated, you must issue a 1099-NEC (or 1099-MISC for gross proceeds) if you paid them $600 or more for legal services. This is one of the most common 1099 mistakes businesses make.
- What's the difference between 1099-NEC and 1099-MISC?
- The IRS revived Form 1099-NEC in 2020 to report nonemployee compensation (box 7, previously on 1099-MISC). Form 1099-MISC still exists for other types of payments: rents (box 1), prizes and awards (box 3), royalties (box 2), and gross proceeds to attorneys (box 10). If you paid a contractor for services, use 1099-NEC. If you paid a landlord rent or a person won a raffle, use 1099-MISC.
- What if I realize I filed a wrong 1099-NEC?
- File a corrected 1099-NEC. Check the 'CORRECTED' box at the top of the form, fill in the correct information, and send it to both the recipient and the IRS. If you overstated the amount, file a corrected form with the right amount. If you issued to the wrong person, file a corrected form with a $0 amount for the wrong recipient, then file a new original for the right recipient.
- Do I need to file 1099s for rent paid to my landlord?
- Rent paid to an individual or partnership (not a corporation) of $600 or more goes on Form 1099-MISC box 1, not 1099-NEC. This applies to office rent, equipment rental, and other rental payments. Collect a W-9 from your landlord if they're not a corporation. Note: rent paid to a real estate agent on behalf of a landlord is handled differently.
Take the next step
Turn tax questions into a plan. Talk with Matt or see how we work with operating business owners.
Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.