By Andrea Flores, owner of Simmer Tax and Accounting
If you paid a contractor this year, you may owe them a Form 1099-NEC by the end of January. The rules changed for 2026, and a lot of business owners do not know it yet. Here is what changed, what you need to do now, and how to make January a lot less stressful.
What changed for 2026?
For years, you had to send a 1099-NEC to any contractor you paid $600 or more. That number had not changed since 1954. Starting with payments made in 2026, the IRS raised it to $2,000. So if you paid a contractor $1,500 this year for services, you generally do not need to send them a 1099-NEC anymore. If you paid them $2,000 or more, you do. The IRS says the $2,000 amount may start going up with inflation in 2027.
Who gets a 1099-NEC?
A 1099-NEC goes to people and businesses you paid for services who are not your employees. Think freelancers, consultants, subcontractors, a virtual assistant, or a web designer. It is for work done for your business, not personal payments. In most cases you do not send one to a corporation. One big exception is attorneys. Payments to a lawyer for services are generally reported even if their firm is a corporation.
Get the W-9 before you pay
A Form W-9 is how a contractor gives you their legal name, business type, and tax ID number. The easiest time to get it is before the first payment, when they still want to get paid. Chasing a W-9 in late January from someone you hired last spring is no fun. If you are missing any W-9s right now, ask for them this month, not in January.
What about payments by credit card or PayPal?
If you paid a contractor with a credit card or through a payment app like PayPal, you usually do not report that payment on a 1099-NEC. The payment company handles that reporting instead, on a different form called a 1099-K. This is why it matters how you paid each contractor, and why your bookkeeping should show it clearly.
When are 1099s due?
The 1099-NEC is due to both the IRS and the contractor by January 31. If January 31 lands on a weekend or holiday, it moves to the next business day. That leaves very little time after the holidays, which is why we start 1099 prep in November and December with our clients.
How your bookkeeping makes this easy
Good bookkeeping makes 1099 prep a report you run, not a scavenger hunt. When every contractor is set up as a vendor, every payment is recorded to the right vendor, and the W-9 is on file, the totals are already there. When bookkeeping is behind, you end up digging through bank statements trying to remember who got paid what. That is where mistakes and missed deadlines come from.
A real person on our team still checks the list before anything is filed, because software cannot always tell a contractor payment from a refund or a supply purchase.
Your 1099 checklist for right now
Make a list of everyone you paid for services this year. Mark how you paid each one. Total the payments made by check, bank transfer, or cash. Flag anyone at $2,000 or more. Make sure you have a W-9 for each of them. Then file by the January deadline.
This is general information, not tax advice for your specific situation.
If you want help getting your bookkeeping and 1099s ready before January, take our short quiz. It is three questions, and it tells you if we would be a good fit to work together.
https://simmertaxquiz.netlify.app/
Andrea
Common questions
Q: What is the 1099-NEC threshold for 2026?
A: For payments made in 2026, you generally need to send a Form 1099-NEC to a contractor you paid $2,000 or more for services. Before 2026, the amount was $600.
Q: When is Form 1099-NEC due?
A: Form 1099-NEC is due to the IRS and to the contractor by January 31. If that date falls on a weekend or holiday, it moves to the next business day.
Q: Do I need a 1099 for contractors I paid by credit card or PayPal?
A: Usually no. Payments made by credit card or through a payment app are generally reported by the payment company on Form 1099-K, not by you on Form 1099-NEC.
Q: Do I send a 1099 to a corporation?
A: In most cases no. Payments to attorneys are a common exception and are generally reported even if the law firm is a corporation.
Q: What is a W-9 and when should I get it?
A: A Form W-9 gives you a contractor’s legal name and tax ID number. The best time to get it is before you make the first payment.
Sources: IRS Instructions for Forms 1099-MISC and 1099-NEC, IRS Form 1099-NEC and Independent Contractors FAQ, IRS Internal Revenue Bulletin 2026-19, IRS Form 1099-K FAQs
