Who Needs to Issue a 1099-NEC in 2026?
- Timalyn S. Bowens
- Jan 18
- 5 min read
The 1099 threshold has been a topic of discussion for a while in our post-COVID era. It feels as if each administration changed what its predecessor did about the reporting requirements. The One Big Beautiful Bill made changes to the 1099-NEC filing requirements. These changes went into effect on January 1, 2026.
This article is to clarify what your reporting obligations are if you paid non employees compensation during 2025. Not complying can result in hefty IRS civil penalties that are avoidable. So let's take a look at what a 1099-NEC is, when it is due, and who needs to issue them.
What is a 1099-NEC?
A 1099-NEC is an information tax return to report non-employee compensation to contractors for personal services. This is anyone who is not an employee of the business. Examples of contractors are consultants, freelancers, and gig workers. The payer is the business that hired the contractor.
They provide a copy of the 1099-NEC to the IRS, the contractor, and the state or city if they require it. For example, I live in Louisville, Kentucky. Kentucky does not require businesses to file 1099-NECs with them but the city of Louisville does. It's also best practice for the company to keep a copy on file for its own records.
This information return reports the gross amount the contractor received from the company. This includes materials and supplies. For example, if American Plumber Inc. hires Joe Plumber as a contractor, they will issue him a 1099-NEC for the services he did for them. This amount will include the amount they paid him for the pipes and tools he needed to do his work.
Joe will then be responsible for reporting that 1099-NEC income on Schedule C of his tax return if he is a sole proprietor. He can subtract the costs of the materials and supplies on his own tax return.
When are 1099-NECs due?
1099-NECs are typically due on January 31st per §6071(c). This year, January 31st is on a Saturday, so the due date moves to the next business day, Monday, February 2nd. This is the due date to have the information return sent to the IRS and the recipient of the form.
1099-NEC Late Filing Penalties
The IRS takes filing accurate and timely 1099-NECs seriously. The table below shows the information return penalties that the IRS can assess for each 1099-NEC that is not filed on time.
Amount of Time after Due Date | Amount of Late Filing Penalty |
>30 Days Late | $60 |
31 Days Late - August 1st | $130 |
August 2nd - Not Filed | $340 |
Intentional Disregard | $680 |
You can avoid penalties for late filing by requesting an extension of time to file with the IRS. This extension is for an additional 30 days and is not automatic. For 1099-NECs, there is a certain set of criteria the filer must meet to qualify.
Death, serious illness, or the unavoidable absence of the individual responsible for filing the information returns affected the operation of the filer.
Filer suffered a catastrophic event in a federally declared disaster area that made the filer unable to resume operations or made necessary records unavailable.
Fire, casualty, or natural disaster affected the operation of the filer.
First year of establishment for the filer.
The filer didn't receive data on a payee statement in time to prepare an accurate information return.
If you meet any of those criteria, you can request an application for an extension of time to file information returns on Form 8809. For 1099-NECs, you have to mail this form by the 1099-NEC due date to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0209
Who does the IRS require to file a 1099-NEC?
The IRS requires businesses that paid contractors $600+ during the 2025 tax year to file a 1099-NEC per §6041A(a). The 1099-NEC reporting threshold goes up to $2,000 for the 2026 tax year. This threshold is for total payments. So if a freelance writer gets paid $250/ an article and they receive 6 payments of $250, the total they received was $1,500. This means they were over the $600 reporting threshold for 2025, and the business payer needs to issue them a 1099-NEC for $1,500.
If you are a small business owner, you may receive a 1099-NEC for work that you did for another company. If you paid someone $600+ for the 2025 tax year, the IRS requires you to issue a 1099-NEC to the person for the services rendered.
This is for cash payments, not those made through a banking system or credit card. Examples of this are payments made through PayPal, Venmo, or with a credit card.
Payments made in cash, by debit card, cash app, direct debit from a bank account, or ACH have a reporting requirement. The reason for this is that if the payment went through a bank or merchant payment system, the recipient will receive a 1099-K.
If you are filing 9 or fewer 1099-NECs, you can do so by paper. If you are doing 10 or more, the IRS requires you to e-file the forms. You can do it for free directly through the IRS File Information Return Electronically system or a paid platform. If you're past the deadline to set up an account with the IRS, I recommend 1099.com through Zenwork. *
*I am an affiliate of 1099.com. This means that I will receive a commission if you decide to use my link to use their service to file your 1099s or W-2s.
In Summary
1099-NECs report income paid to contractors by businesses to the IRS. The business sends a copy to the IRS, the contractor, and the state when necessary. 1099-NECs are due on February 2nd in 2026.
If a business meets certain criteria they may request additional time to file by filing Form 8809 with the IRS. If the business files their 1099-NECs late, there are hefty IRS civil penalties they may face. So make sure that you are in compliance when it comes to filing 1099-NECs this year.
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Timalyn S. Bowens EA is America's Favorite EA and Tax Expert who will work hard to find a customized legal solution for you! As an Enrolled Agent licensed through the Internal Revenue Service, Timalyn can fight the IRS for taxpayers in all 50 states. As the host of Tax Relief with Timalyn Bowens and a YouTube content creator, she empowers taxpayers to make educated decisions about their tax situation.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information.
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