Handbook / Self-employment tax and 1099s

Form 1099-NEC for the 2026 tax year: receiving one, issuing one, and the new $2,000 threshold

Tax-year note: Tax information on this page applies to the 2026 tax year (returns filed in 2027), from IRS pages checked in November 2026. Figures and dates are labelled with their tax year where they appear. Check current IRS pages before you rely on them.

Form 1099-NEC is the information return businesses use to report what they paid to non-employees for services. If you freelance, you will receive them. Once you hire help, you may have to send them. The 2026 tax year brings the first big change in years: the reporting threshold rises from $600 to $2,000. This guide covers both sides of the form. All figures are for the 2026 tax year and come from the IRS instructions for Forms 1099-MISC and 1099-NEC and related IRS pages, checked in November 2026.

What the form reports

The IRS says to use Form 1099-NEC to report nonemployee compensation. In the current instructions this is box 1a. It covers fees, commissions and other compensation paid to someone who is not your employee for services in the course of your trade or business. The instructions add that parts and materials supplied as part of a service can be included.

The instructions also say to report on these forms only payments made in the course of your trade or business. Personal payments, such as paying a plumber to fix your home, are not reportable.

The 2026 threshold: $2,000

For tax years beginning after 2025, the instructions say the minimum threshold for reporting these payments increased to $2,000, and may be adjusted for inflation beginning in 2027. So for payments made in 2026, a business generally files a 1099-NEC for each non-employee paid $2,000 or more for services during the year.

The instructions keep a $600 threshold for gross proceeds paid to attorneys, which are reported on Form 1099-MISC.

If you receive one

A 1099-NEC shows what a client reported paying you. It is a cross-check, not the definition of your income.

• Report all business income on Schedule C, including payments from clients who did not send a form.
• Do not double-count. If a client paid you by card or through a payment app and you also receive a 1099-K, make sure the same income is not reported twice.
• Check for errors. If the amount is wrong, ask the payer for a corrected form.

The IRS page on independent contractors notes that people who receive this income are generally subject to self-employment tax. The guide on Schedule SE shows how it is figured.

If you pay contractors

Before paying. The IRS recommends getting a completed Form W-9 from each contractor, giving their name, taxpayer identification number and entity type, and keeping it in your files for four years.

During the year. Track payments per contractor and how you paid them.

What not to report on 1099-NEC:

• card and payment-network payments. The instructions say these are reported on Form 1099-K by the payment settlement entity.
• payments to corporations, generally, including LLCs taxed as corporations, with exceptions such as certain attorney payments.
• payments for merchandise and freight.
• wages to employees, which go on Form W-2.

Sales for resale. Box 2 can be used to report direct sales of $5,000 or more of consumer products to a person for resale.

The deadline

The instructions say section 6071(c) requires filing Form 1099-NEC on or before January 31, and if that date falls on a Saturday, Sunday or legal holiday, the due date is the next business day. For 2026 payments, January 31, 2027 is a Sunday, so the deadline is February 1, 2027. Under the IRS General Instructions for Certain Information Returns, recipient copies of Forms 1099 are generally due by the same date, so send the contractor's copy at the same time.

Paper or electronic

The IRS says you must e-file if you have 10 or more information returns in a calendar year, counting different types together. The IRS says it is retiring the older FIRE system and that, beginning with the 2027 filing season for 2026 returns, its IRIS portal becomes the sole electronic filing platform for information returns previously accepted through FIRE.

Contractor or employee?

The form only applies to genuine independent contractors. The IRS says a person is an independent contractor if the payer controls or directs only the result of the work, not how it is done. Misclassifying an employee as a contractor can be costly. See the working-alone guide on contractor or employee and the handbook guide on independent contractor agreements.

For 2026: $2,000 threshold for services, W-9 first, card payments excluded, deadline February 1, 2027, and report all your own income whether a form arrives or not.