1099-NEC Rules for 2026: Threshold, Deadlines and Penalties
For payments made in 2026, file Form 1099-NEC for each person you paid at least $2,000 in the course of your business for services, up from the old $600 threshold. You must give the recipient their copy and file with the IRS by January 31, which moves to Monday, February 1, 2027, because January 31 falls on a Sunday.
By SF Business Solutions · Our team includes one licensed CPA · 4 sources · Updated September 10, 2026
Who gets a 1099-NEC
Form 1099-NEC reports nonemployee compensation. For payments made in 2026, it goes to:
- Independent contractors and freelancers paid $2,000 or more for services
- Sole proprietors, partnerships and LLCs taxed as partnerships or disregarded entities
- Attorneys paid $2,000 or more in legal fees in the course of your business, even when the law firm is a corporation
Who does not
Payments to a C or S corporation, including an LLC taxed as one, generally do not need a 1099-NEC, apart from the attorney exception. Employees get a W-2, not a 1099. And payments you make by credit card or through a payment network such as PayPal are reported by the processor on Form 1099-K, so you leave them off the 1099-NEC.
The key numbers
The threshold and due dates below are from the IRS instructions for payments made in 2026. The penalty amounts are the IRS schedule for information returns due in 2026; the IRS adjusts them for inflation each year, so returns due in 2027 may carry slightly higher amounts.
| Item | For payments made in 2026 |
|---|---|
| Filing threshold | $2,000 or more in the year |
| Copy to the recipient | By February 1, 2027 |
| File with the IRS | By February 1, 2027 |
| Penalty, filed up to 30 days late | $60 per return |
| Penalty, 31 days late through August 1 | $130 per return |
| Penalty, after August 1 or not filed | $340 per return |
| Penalty, intentional disregard | $680 per return |
Collect a W-9 before the first payment
Ask every contractor for a completed Form W-9 before you pay them. It gives you their legal name, tax classification and taxpayer identification number, which is everything the 1099-NEC needs, and it tells you whether they are a corporation you can skip. If a payee will not give you a correct taxpayer identification number, the IRS rules on backup withholding can apply to your payments.
- In January, run a vendor payment report for the calendar year
- Mark every payee at $2,000 or more, and check their W-9 for entity type
- Leave out payments made by card or payment network
- Send recipient copies and file with the IRS by February 1, 2027
Working with SF Business Solutions
When we keep your books, vendor payments are coded to the right payees all year, so the January 1099 run is a report rather than a project. Monthly bookkeeping starts at $250 a month, and we prepare and file your business tax return too. If last year's payments were never tracked, cleanup starts at $250.
What is the 1099-NEC threshold for 2026?
$2,000. For payments made in 2026 you file a 1099-NEC for each nonemployee paid at least $2,000 for services in the course of your business.
When are 1099-NEC forms for 2026 due?
By February 1, 2027, both to the recipient and to the IRS. The normal date is January 31, which falls on a Sunday in 2027.
Do I send a 1099-NEC to an LLC?
It depends on how the LLC is taxed. A single-member LLC or one taxed as a partnership gets one; an LLC taxed as a C or S corporation generally does not. The contractor's W-9 tells you which.
Do payments by credit card or PayPal need a 1099-NEC?
No. Payments made by card or through a payment network are reported by the processor on Form 1099-K.
What happens if I file late?
The IRS charges a penalty per return that rises the later you file: for returns due in 2026 it was $60 up to 30 days late, $130 through August 1 and $340 after that.
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