Filing 1099s in 2026: What the New $2,000 1099-NEC Threshold Changes, and What It Doesn't

For seventy-two years, the number was $600. Every bookkeeper knew it, every accountant quoted it, and the 1099-NEC threshold had stopped looking like a policy choice and started looking like a fixed point. The One Big Beautiful Bill Act, signed July 4, 2025, moved it to $2,000 for payments made on or after January 1, 2026, with inflation indexing to follow from 2027. The first forms filed under the new figure are the ones due early in 2027.

Most small businesses will file fewer forms as a result. What hasn't moved is everything around the number: who qualifies as a contractor, which payments count, the due date, and what happens without a W-9. That's what this piece covers, along with the light-touch routine that keeps January from turning into a dig through old bank statements.

The New 1099-NEC Threshold at a Glance

Three details decide how the threshold is applied. It's cumulative: you add up everything paid to one person across the year, rather than judging each invoice alone, so five $500 jobs make a $2,500 contractor. It's per taxpayer, not per vendor record. And it runs on the date money left your account: a December invoice you settle in January belongs to the following year.

Which Contractors Get a Form?

Run each payee through four questions. A form is required only when the answer to all four is yes:

1. Was it a business payment for services? Hiring a plumber for your own kitchen doesn't qualify; hiring one for the office does.
2. Is the payee a non-employee? Employees are handled through payroll and a W-2. Getting this classification right matters far more than the form itself.
3. Is the payee unincorporated, or does an exception apply?
4. Did 2026 payments total $2,000 or more, counting only the methods that qualify?

Does an LLC get a 1099-NEC?

Frequently, but the entity name won't tell you. The W-9 will. An LLC with a single owner, taxed as a sole proprietorship, generally receives a 1099-NEC. So does one taxed as a partnership. An LLC that elected S-corp or C-corp treatment generally doesn't. Ask for the form, then check the tax classification box rather than inferring from "LLC" on the invoice.

Are corporations ever included?

Usually not, with two standing exceptions. Payments for legal services and medical and health care payments are reportable even when the recipient is incorporated. If your attorney's firm received $2,000 or more in fees from you this year, it gets a 1099-NEC regardless of entity type.

What about buying goods from a sole proprietor?

Goods sit outside the 1099-NEC entirely, since the form covers services. Stock, supplies, and equipment bought from an individual aren't reported. Where labor and parts arrive on one invoice, as with an electrician who supplies and fits a panel, parts incidental to the service generally go into the reportable figure.

Counting Payments Correctly

Most bad 1099s aren't bad because someone misread the threshold. They're bad because the total underneath was wrong. Count what you paid, and pay attention to how:

• Include checks, cash, ACH and wire transfers, and any payment logged straight to the vendor rather than through a bill, such as an on-the-spot check or a commission booked by journal entry.
• Exclude anything paid by credit card, debit card, or a payment app like PayPal. Those processors file Form 1099-K for the same money, and putting it on your 1099-NEC as well reports the contractor's income twice.
• Exclude accountable expense reimbursements and anything paid to employees.

One error is easy to miss: the same contractor stored under two names. "J. Patel Consulting" and "Jaya Patel" may each look like a $1,200 payee, comfortably under the line, when the IRS sees a single tax ID paid $2,400. Imports from older systems create these duplicates constantly. When two records share a TIN, treat them as one person and file one form.

Below the threshold, nobody files a form. The income is still income.

Key Dates for 2026 Forms

The usual due date for 1099-NEC is January 31, for both the contractor's copy and the IRS filing. January 31, 2027 is a Sunday, so forms covering 2026 are due on Monday, February 1, 2027. No automatic extension exists for this form, and penalties are assessed per return, rising the later you file.

Since 2024, a business with 10 or more information returns in total has to file them electronically, and W-2s count toward that ten. A small firm with seven employees and three qualifying contractors is already obliged to e-file. The IRS's free IRIS portal accepts 1099 filings, and authorized e-file services will submit them for a per-form charge.

What if a contractor refuses to provide a W-9?

Without a taxpayer ID, you're generally required to withhold 24% as backup withholding from reportable payments and pass it to the IRS, and any payee you withhold from receives a 1099 whatever the annual total. Very few contractors push back once they understand that. Ask for the W-9 alongside the first invoice and hold payment until it arrives.

The Year-Round 1099 Routine

A painful January is nearly always a year of small omissions catching up at once. Four habits, each taking a minute or two, prevent it:

1. W-9 first, payment second. Store the TIN, tax classification, and date received on the vendor record the day it arrives.
2. Tag the vendor as a 1099 contractor at setup. That flag is what lets your books keep the running total without anyone thinking about it.
3. Record every payment against the vendor. A payment that only exists in the bank feed, never tied to a payee, won't appear in that contractor's total. Running bills through a proper accounts payable process keeps each payment attached to the right supplier.
4. Review totals in October and again in December. Anyone closing in on $2,000 without a W-9 is the person to contact now, not in late January. A Q4 line item in your month-end close routine makes it automatic.

1099 Tracking in Kantivo

Kantivo's 1099 Center lives inside your books rather than in a separate tool. Each vendor record carries a 1099-eligible flag, the TIN and its type, and whether and when a W-9 came in. From that point Kantivo keeps a running tax-year total for every contractor. Bill payments are included, and so are checks, expenses, and journal entries paid straight to the vendor. Card payments are left out on purpose, because they belong on the processor's 1099-K.

One dashboard shows how many contractors are over the reporting threshold, who has no TIN on file, and who still owes you a W-9, so the October review is a single screen. When a contractor appears under two vendor records, Kantivo flags records that share a tax ID or look like the same name, and lets you link them so their payments roll onto one form without anything being merged or deleted. Then print 1099-NEC forms directly, or e-file through TaxBandits using your own TaxBandits account. Because the database runs on your own computer, contractors' Social Security and EIN numbers stay on your hardware.

The Takeaway

A $2,000 1099-NEC threshold means fewer forms, but the work that makes filing easy is unchanged. Get the W-9 before you pay, tag contractors when you add them, record every payment against the vendor, and leave card payments to the processors. Do those four things through the year and the February 1, 2027 deadline takes a quarter of an hour. Leave them and it takes a weekend.

Frequently Asked Questions

How much do you have to pay a contractor before a 1099-NEC is required in 2026?

$2,000 across the calendar year. Any unincorporated contractor you pay that much or more for business services between January 1 and December 31, 2026 needs a 1099-NEC. The figure was $600 for every year up to and including 2025; the One Big Beautiful Bill Act raised it, and from 2027 it will rise with inflation.

What is the deadline for 1099-NEC forms covering 2026?

Monday, February 1, 2027. The normal due date is January 31, but in 2027 that's a Sunday, so it rolls to the next business day. The same date applies to the copy you give the contractor and the copy you file with the IRS, and 1099-NEC has no automatic extension.

Does an LLC get a 1099-NEC?

Often, but not always. The deciding factor is the tax classification the LLC lists on its W-9. A single-member LLC taxed as a sole proprietorship, or an LLC taxed as a partnership, generally receives one. An LLC taxed as an S or C corporation generally does not, unless the payment is for legal services or for medical and health care, which are reportable to corporations as well.

Should card or PayPal payments to a contractor be included on the 1099-NEC?

Leave them out. Money sent by credit card, debit card, or a payment app such as PayPal is reported by that processor on Form 1099-K. Adding it to your 1099-NEC double-reports the contractor's income. Only checks, cash, and bank transfers count toward the $2,000.

What should I do if a contractor refuses to provide a W-9?

Without a taxpayer ID you're generally obliged to withhold 24% of reportable payments as backup withholding and pay it to the IRS, and any payee you backup-withhold from gets a 1099 whatever the annual total. The cleaner route is to make a completed W-9 a condition of the first payment.

If no 1099-NEC is issued, is the contractor's income tax-free?

No. The threshold governs only the payer's reporting duty. A contractor you paid $1,800 in 2026 receives no form from you but must still declare the full $1,800 on their own return.

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