# Form 1099-NEC: Contractor Reporting

Country: United States
When: 31 January following the calendar year of payment. When 31 January falls on a weekend the deadline moves to the next business day, so the forms for 2026 payments are due Monday 1 February 2027.

Annual reporting of non-employee compensation of $2,000+ paid to independent contractors (payments made after 31 December 2025; the threshold was $600 before, and is indexed to inflation from 2027). Issuer must send 1099-NEC to recipient AND IRS by 31 January following the calendar year. Applying the $2,000 threshold means counting only payments for services during the calendar year, and the threshold applies to payments made after 31 December 2025.

## Who this applies to

- Any business that paid an independent contractor $2,000+ in a calendar year (payments made after 31 December 2025)
- 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 through the IRS IRIS system or a payroll or accounting provider (mandatory when a business files 10 or more information returns in a year). The IRS is retiring FIRE, and IRIS becomes the only intake system from the 2027 filing season. Paper accepted under 10 forms. Many payroll/accounting platforms file directly.

## Payment due

No payment: informational return only.

## What happens if you miss it

Tier-based penalties for 2026: $60 per form if filed within 30 days, $130 from 31 days late through 1 August, $340 after 1 August or not filed, and $680 for intentional disregard with no cap. The same charges apply to each return and to each payee statement.

## Submission 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 $2,000+ recipient
- File with IRS and send copy to recipient by 31 January

## Documents you need

- Form W-9 for each contractor with legal name, business type and TIN
- Payment records by calendar year with invoices
- Records of any backup withholding and Form 945
- State filing requirements, since several states ask for a copy

## 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)
- Skipping backup withholding when a contractor refuses to provide a TIN: the payer must withhold at 24% and report it on Form 945

Source: https://www.irs.gov/forms-pubs/about-form-1099-nec