If you pay subcontractors, January brings paperwork. For payments made in 2026, the rules changed. The filing threshold rose from $600 to $2,000. The deadline is Monday, February 1, 2027.
Greg Neilsen, JD, LLM (Master of Laws in Taxation), reviews our guides. Last reviewed: October 5, 2026.
Each answer is below.
A 1099-NEC goes to a sub you paid $2,000 or more in 2026 for work in your business. A 1099-MISC covers other business payments, like rent. Some payments get no form at all.
The 1099-NEC applies when four things are true:
Parts and materials count in the total when supplying them was incidental to the service. A sub’s invoice for labor plus the wire and fittings used on the job goes on the form in full. Payments for merchandise, freight, and storage do not.
The 1099-MISC handles rent and a few other payments. Rent of $2,000 or more paid to an individual landlord for a shop, yard, or equipment goes in box 1. Gross proceeds paid to an attorney, like a settlement check, go in box 10 at $600 or more.
No form goes out for personal payments or for payments to most corporations. Card and payment-network payments are covered below. Employees get a W-2, never a 1099.
Example: A pool service company rents a storage yard from an individual for $1,200 a month. That is $14,400 for 2026. The landlord gets a 1099-MISC for rent. The company’s pool tech is an employee and gets a W-2.
$2,000. The 2025 tax law, P.L. 119-21, raised it from $600 for payments made after December 31, 2025. For calendar years after 2026, the $2,000 adjusts for inflation, rounded to the nearest $100.
The test is the total paid to one payee during the calendar year. Ten checks of $250 add up to $2,500. That crosses the line.
Payments made in 2025 stayed under the old $600 rule. Those forms were due in early 2026.
Example: A remodeler pays a tile sub $1,800 and an electrician sub $6,500 in 2026. Both subs are sole proprietors. The tile sub falls under $2,000 and gets no 1099-NEC. The electrician gets one showing $6,500 in box 1. The remodeler collected a W-9 from both before the first check. In March, nobody knows where a sub’s total will land by December.
Check the W-9. An LLC taxed as an S corporation or C corporation generally gets no 1099-NEC. An LLC taxed as a sole proprietorship or partnership does.
The letters “LLC” tell you nothing on their own. The tax classification box on the W-9 tells you what you need.
Two exceptions matter most. Attorneys’ fees go on a 1099-NEC even when the law firm is a corporation. Medical and health care payments go on a 1099-MISC even when the provider is a corporation.
Example: A landscaper pays a tree-trimming LLC $12,000 in 2026. The LLC’s W-9 shows it is taxed as an S corporation. No 1099-NEC is required. The landscaper keeps the W-9 on file as the reason. Had the W-9 shown a single-member LLC taxed as a sole proprietorship, the $12,000 would go on a 1099-NEC.
Example: The same landscaper pays a law firm, organized as a professional corporation, $3,500 to review a commercial contract. That payment gets a 1099-NEC anyway.
Landscapers have their own year-end pattern. See our landscaping accounting page.
Leave those amounts off the 1099-NEC. Payments by credit card, debit card, or a third-party payment network get reported on a 1099-K. The card processor or payment network files that form.
The 2025 law restored the old 1099-K threshold for payment networks. A network files only when a payee’s total tops $20,000 and the payee has more than 200 transactions.
A check, cash, or direct bank transfer is not a card payment. Those amounts stay on your 1099-NEC.
Example: An electrical contractor pays a helper sub $9,000 in 2026. Of that, $5,000 went by check and $4,000 went on the business credit card. The 1099-NEC shows $5,000. The card side reports the other $4,000.
Because January is too late. A sub who has been paid in full has little reason to answer your email.
The W-9 gives you the legal name, the tax classification, and the taxpayer identification number (TIN). Get it before you cut the first check. Keep one on file for every sub, even the ones you expect to stay under $2,000.
If a payee will not give you a TIN, you must start backup withholding. You hold back 24 percent of each reportable payment and send it to the IRS. You report it on the 1099-NEC and on Form 945.
The IRS also runs a TIN Matching program through IRS e-Services. Eligible payers can check a name and TIN against IRS records before filing. A clean match heads off IRS notices later.
Example: A roofing company hires a new sub who keeps forgetting the W-9. The company owes him $5,000 for a re-roof. It withholds 24 percent, or $1,200, and pays him $3,800. The $1,200 goes to the IRS. Once the W-9 arrives, backup withholding stops on later payments.
February 1, 2027. The usual deadline is January 31. In 2027, January 31 falls on a Sunday. The deadline moves to the next business day, Monday, February 1.
The same date applies to both copies. The recipient copy goes to the sub. The IRS copy goes to the IRS. The 1099-NEC has no automatic extension.
The 1099-MISC runs on a different calendar. For most boxes, the recipient copy is due February 1, 2027. The IRS copy is due March 1, 2027 on paper, or March 31, 2027 if filed electronically.
Example: A plumbing company paid four subs over $2,000 in 2026. It mails each sub a copy by February 1, 2027. It files the IRS copies the same day. Sending the subs’ copies on time and filing the IRS copies in March would still draw a penalty on the IRS side.
Yes, if you file 10 or more information returns in total. The count adds up every type: 1099-NECs, 1099-MISCs, W-2s, and others. The rule has applied to returns filed since January 1, 2024.
The IRS runs a free online portal called IRIS, the Information Returns Intake System. You need an IRIS Transmitter Control Code before you can file there. Apply well before January.
Example: A remodeler sends 1099-NECs to 7 subs and W-2s to 4 employees. That is 11 information returns. It crosses 10, so every one of them gets filed electronically. Remodelers can see how we set up their books on our remodeling accounting page.
The IRS charges per form. It charges twice: once for the IRS copy and once for the recipient copy. For forms due in 2027, the per-form amounts are:
| When the form is filed or furnished | Penalty per form |
|---|---|
| Within 30 days after the due date | $60 |
| After 30 days, by August 1, 2027 | $130 |
| After August 1, 2027, or never | $340 |
| Intentional disregard | The greater of $690 or 10 percent of the amount required to be reported, with no annual cap |
Annual caps apply to the first three tiers. The caps are lower for businesses with average gross receipts of $5 million or less. The IRS can waive a penalty for reasonable cause. Do not plan on it.
Example: A landscaping company forgets five 1099-NECs and finds them in September 2027. Each missing form costs $340 for the IRS copy and $340 for the sub’s copy. That is $680 a form, or $3,400. Filed and furnished by March 3, 2027, the same five forms would have cost $600.
Not for the 1099-NEC. Florida has no personal income tax. There is no state copy to file for payments to subs.
Florida does require card processors and payment networks to file 1099-Ks with the Florida Department of Revenue. That duty sits with the processor. The contractor paying the sub has nothing to file with the state.
Example: A Tampa electrical contractor pays three Florida subs over $2,000 each. It files three 1099-NECs with the IRS and sends each sub a copy. Florida gets nothing. A contractor with subs or jobs in other states should check those states’ rules.
This fits inside the rest of your year-end work. Our year-end tax planning checklist covers the other moves to make before December 31. For the wider changes in the 2025 law, see our 2026 tax planning guide.
One flat monthly fee covers bookkeeping, tax preparation, and planning on most plans. Plans start at $750 per month. We set the fee after we see your books, in writing, before work starts.
We keep your books in QuickBooks Online. We connect your field software, like Jobber, Housecall Pro, or ServiceTitan, rather than replace it. Sub payments are coded by payee all year, so the January list comes straight from the books. See our bookkeeping service.
No. For payments made in 2026, the 1099-NEC threshold is $2,000 per payee for the year. Keep the sub’s W-9 on file anyway. A second job could push the total over the line.
It is the new base. The 2025 law set it for payments made after December 31, 2025. For calendar years after 2026, it adjusts for inflation, rounded to the nearest $100.
Generally no. Payments to a corporation, including an LLC taxed as an S or C corporation, are exempt. Attorneys’ fees are the main exception, and they go on a 1099-NEC.
February 1, 2027, for both the sub’s copy and the IRS copy. January 31 falls on a Sunday in 2027. The deadline moves to Monday.
Start backup withholding. Hold back 24 percent of each reportable payment and send it to the IRS. Report it on the 1099-NEC and on Form 945.
This guide is educational and is not tax advice for your situation. Tax rules change, and the right move depends on your numbers. Talk to a tax professional before you act.
Greg Neilsen, JD, LLM (Master of Laws in Taxation), reviews our guides. Last reviewed: October 5, 2026.
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