Form 1099-NEC — Contractor Reporting
Annual reporting of non-employee compensation of $600+ paid to independent contractors. Issuer must send 1099-NEC to recipient AND IRS by 31 January following the calendar year.
Who this applies to
- Any business that paid an independent contractor $600+ in a calendar year
- Includes sole proprietors, LLCs, partnerships, corps making payments
- Excludes payments to corporations (with limited exceptions for legal/medical)
What to file
Form 1099-NEC for each recipient with their name, address, TIN (from Form W-9), and total non-employee compensation. Form 1096 transmittal for paper filers.
How to file
E-file via IRS FIRE system (mandatory for 10+ forms from 2024). Paper accepted under 10 forms. Many payroll/accounting platforms file directly.
Payment due
No payment — informational return only.
Penalties for missing this deadline
Tier-based penalties: $60 per form (within 30 days late), $120 (30 days–1 August), $310 (after 1 August), $630 (intentional disregard). Doubled for failures to both IRS and recipient.
Filing checklist
- Collect W-9 from every contractor at start of engagement
- Aggregate annual payments per contractor (only count non-employee compensation, not reimbursements)
- Determine if contractor is corporation (most are exempt) or sole prop/LLC (1099 required)
- Generate 1099-NEC for each $600+ recipient
- File with IRS and send copy to recipient by 31 January
Common mistakes to avoid
- Missing the 31 January deadline (much earlier than other forms)
- Not collecting W-9 upfront (chasing TINs in January is brutal)
- Issuing 1099 to corporations unnecessarily (they're exempt unless legal/medical)
- Misclassifying employees as contractors (huge IRS penalty exposure)
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