Get Started

If you pay freelancers or contractors, you have probably asked this question every January: Do I need to send a 1099-NEC? The answer changed this year. For payments made in 2026, the 1099-NEC threshold is $2,000, up from $600. That is the first change to this number in decades, so many business owners are still working from old rules and may file forms they no longer need, or miss details that still matter.

This guide explains the new limit in plain language. You will learn who needs a form, who does not, how the $2,000 is counted, and what to do before the 1099-NEC due date in 2027. You will also find a simple checklist you can follow through the year, so tax season feels less stressful. This blog is general information, not tax advice. Check the IRS instructions or ask a tax professional about your own situation.

The Short Answer

You need to send a Form 1099-NEC if all of the following are true:

  1. You paid someone who is not your employee, such as an independent contractor, freelancer, or consultant.

  2. The payment was for services in the course of your business.

  3. You paid that person $2,000 or more in total during 2026.

  4. The person is not a corporation (some exceptions apply, covered below).

If you paid a contractor $1,800 in 2026, you do not need a form. If you paid $2,000 or more, you do.

What Changed and Why It Matters

The One Big Beautiful Bill Act raised the reporting threshold from $600 to $2,000 for payments made after December 31, 2025. From 2027 onward, the amount will be adjusted for inflation. As of mid October 2026, the IRS had not published the 2027 figure, so watch for that update.

The change follows the payment date, not the filing date. The forms you filed in early 2026 covered 2025 payments, so the old $600 rule applied. The new $2,000 rule applies to payments you make in 2026, which you report in early 2027.

Who Gets a 1099-NEC

A 1099-NEC reports nonemployee compensation. Common examples include:

The key point is that they work for themselves, not for you as an employee. Employees get a W-2, not a 1099.

Payments That Usually Do Not Need 1099-NEC

You generally do not need to file for:

Payments to corporations. Most C corporations and S corporations are exempt, though exceptions exist, such as certain payments to attorneys and for medical services.

Card and online payments. If you paid a contractor by credit card, debit card, or a payment app like PayPal, the payment processor reports it on Form 1099-K. You should not report it again on a 1099-NEC.

Personal payments. Money you pay for personal reasons, like hiring a babysitter for your own home, is not a business expense and is not reported this way.

Purchases of goods. Buying products or supplies is different from paying for services.

Payments to employees. These go through payroll.

Foreign contractors. Payments to people outside the United States usually use Form W-8BEN and different rules, not a 1099-NEC. Check this one carefully if you hire overseas.

Payments to attorneys and some other categories follow special rules, so read the IRS instructions if that applies to you.

How the $2,000 Is Counted

The threshold applies to the total paid to one person in one calendar year, not to each invoice. It also depends on when you pay, not when the work was done.

Here is an example. A designer sends you an invoice for $900 in December 2025 and another for $1,300 in March 2026. If you paid the December invoice in January 2026, your 2026 payments to that person total $2,200. You would file a 1099-NEC in early 2027.

This is why tracking matters. A contractor who looks small in June can cross $2,000 by December.

1099-NEC Due Date for 2026 Payments

The 1099-NEC is normally due on January 31 to both the IRS and the contractor. For 2026 payments, January 31, 2027 falls on a Sunday, so the deadline moves to Monday, February 1, 2027.

Unlike some other 1099 forms, the NEC has the same date for the IRS and the recipient, and it does not get a longer deadline for electronic filing. Build in extra time so you are not working on it during the last week.

What to Do Now: A Simple Checklist

  1. Collect a Form W-9 from every contractor before you pay them. It gives you their name, address, and taxpayer identification number.

  2. Track payments each month by contractor, so you always know who is close to $2,000.

  3. Separate payment methods. Note which payments went by card or app, since those are reported elsewhere.

  4. Review your list in December. Add up each person's total for the year and flag anyone at $2,000 or more.

  5. Prepare the forms in January. Use tax software or an accountant and send each contractor their copy.

  6. File with the IRS by the deadline and keep records of what you filed.

  7. Check state rules. Some states have their own 1099 reporting requirements or thresholds.

Penalties and Backup Withholding

If you miss the deadline or file wrong information, the IRS can charge a penalty for each form. The amount goes up the later you file, and it is higher if the IRS decides you ignored the rules on purpose. Check the current penalty amounts on the IRS website.

You should also know about backup withholding. If a contractor does not give you a taxpayer identification number, you may need to withhold a flat percentage of their payments and send it to the IRS. This is another reason to get a W-9 up front.

Final Thoughts

The new $2,000 rule is good news for small businesses. Fewer contractors will need a form, which means less paperwork and fewer deadlines to manage. But the rule does not remove the need for good records. Payments are counted by the date you pay, and a contractor who looks small in spring can pass $2,000 by December. The best habits are simple. Collect Form W-9 before you make the first payment. Track what you pay each person every month. Review your totals in December and prepare your forms early in January. These steps also help you avoid backup withholding issues and late-filing penalties. Remember that the deadline for 2026 payments is Monday, February 1, 2027.

If you are unsure about a payment, such as one to an attorney, a corporation, or a foreign contractor, contact Accure CFO before you file. You can email us at info@accurecfo.com.