Accounting technology / Glossary / 1099 reporting

What is 1099 reporting?

Definition

1099 reporting is the US requirement for businesses to report certain payments, such as fees to independent contractors, rents and royalties, to the IRS and to the recipient on Form 1099 information returns. For payments made from 2026, nonemployee compensation of $2,000 or more to a person in a year goes on Form 1099-NEC.

Also called1099-NEC1099-MISCinformation returns

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1099-NEC threshold: $2,000 (payments from 2026)
Deadline: 31 January
E-file required: 10 or more returns

How 1099 reporting works

Before paying a US contractor, a business collects Form W-9 with the payee's legal name and taxpayer identification number; foreign payees give a W-8 form instead. Through the year, accounts payable tags reportable payments. After year end, Form 1099-NEC reports nonemployee compensation and Form 1099-MISC reports rents, prizes, royalties and other categories; both must be furnished to recipients and, for 1099-NEC, filed with the IRS by 31 January. The One Big Beautiful Bill Act raised the main threshold from $600 to $2,000 for payments made after 31 December 2025, indexed for inflation after 2026; royalties are reported from $10. Payments to corporations are generally exempt, with exceptions such as legal fees. Businesses filing 10 or more information returns in total must file electronically. Payments by card or through payment apps are reported by the processor on Form 1099-K instead.

Common questions

What is the difference between 1099-NEC and 1099-MISC?+

1099-NEC reports fees paid to non-employees for services. 1099-MISC reports other payments, such as rent, prizes, royalties and payments to attorneys for things other than services.

Do I need to send a 1099 to a corporation?+

Generally no, payments to corporations are exempt. Exceptions include payments to attorneys and medical and health care payments, which are reported even when the payee is incorporated.

What happens if a contractor does not give a W-9?+

The payer may have to apply backup withholding at 24% to payments and still report them. Collecting the W-9 before the first payment avoids this.