# Form 1099-NEC for 2026: who must file and the new $2,000 rule

A plain guide to Form 1099-NEC: what it is, the new $2,000 rule for 2026 payments, who gets one, the February 1, 2027 deadline, and a worked example.

Published October 27, 2026.

Form 1099-NEC is a form you send when your business pays a freelancer or contractor. It tells the IRS, and the contractor, how much you paid them in the year.

For payments made in 2026, you send one when you pay someone who is not your employee **$2,000 or more** in the year for work. The old number was $600. It changed for payments made after December 31, 2025 ([IRS](https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-nec-independent-contractors/form-1099-nec-independent-contractors)).

## The short version

- **NEC** means "nonemployee compensation". That is money you pay for work to someone who is not your employee.
- You file one for each contractor you paid **$2,000 or more** in 2026 for services.
- Payments by **credit card, debit card or a payment app do not count**. The card or app company reports them.
- Most **corporations do not get one**. Most LLCs and all lawyers do.
- The deadline for 2026 payments is **February 1, 2027**, to both the IRS and the contractor.

## Words to know

- **Contractor**: a person or business that does work for you but is not on your payroll. Employees get a Form W-2 instead. See [contractor or employee](https://rightobooks.com/blog/contractor-or-employee/).
- **Form W-9**: a short form the contractor fills in for you. It gives their legal name, address, tax ID number and business type.
- **Form 1099-K**: the form a card company or payment app sends for payments made through it.
- **Corporation**: a business set up and taxed as a C or S corporation. The W-9 shows this.

## The four tests

You file a 1099-NEC for a payee when all four are true ([IRS instructions](https://www.irs.gov/instructions/i1099mec)):

1. They are **not your employee**.
2. You paid them **for work in your business**. Personal payments, like a plumber at your home, do not count.
3. They are a person, a partnership or most LLCs. Most corporations are left out.
4. You paid them **$2,000 or more in total** in the year.

The $2,000 is a total for the year, not per invoice. Four $600 invoices from one person add up to $2,400, so that person gets a form.

## Why card payments do not count

When you pay by card or through a payment app, the card company already reports the payment on Form [1099-K](https://rightobooks.com/blog/form-1099-k-explained/). If you reported it too, the IRS would count the same money twice ([IRS instructions](https://www.irs.gov/instructions/i1099mec)).

So only payments by **check, cash or bank transfer** count toward your $2,000. Your records need to show how you paid, not only how much.

## Corporations, LLCs and lawyers

- **Corporations:** most do not get a 1099-NEC.
- **LLCs:** most do. An LLC is left out only if it chose to be taxed as a corporation. The W-9 tells you which kind it is.
- **Lawyers:** always count, even when the law firm is a corporation ([IRS](https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return)).

Payments for goods, like parts or supplies, are not on this form. It is for work only.

## An example

Maya runs a small design studio. (She is an example, not a real person.) Here is what she paid people in 2026:

| Payee | How paid | Total | Form? |
|---|---|---|---|
| Leo, a person | Bank transfer | $3,200 | Yes |
| Priya's LLC (one owner) | Check $2,400, card $900 | $3,300 | Yes, for $2,400 |
| Northline Inc. (S corporation) | Bank transfer | $4,000 | No, a corporation |
| Dana, a person | Bank transfer | $1,500 | No, under $2,000 |
| Hart Law LLP | Check | $2,500 | Yes, legal work |

Priya's $900 card payment comes out, but her $2,400 by check is still over $2,000. Under the old $600 rule, Dana would have got a form too. Under the new rule, Maya files three.

## The deadline

Form 1099-NEC is due to the IRS and to the contractor by **January 31** ([IRS instructions](https://www.irs.gov/instructions/i1099mec)). There is no later date for filing with the IRS. January 31, 2027 is a Sunday, so the next business day, **Monday, February 1, 2027**, counts as on time.

If you file **10 or more** information returns in total (W-2s count too), you must file them online. The IRS has a free system called IRIS. You need a Transmitter Control Code first, and it can take up to 45 days to get one ([IRS](https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return)). Apply now.

## If a contractor will not give you a tax ID

You may have to hold back federal income tax from what you pay them and send it to the IRS. This is called **backup withholding**. If you hold back any tax, you must file a 1099-NEC for that person, whatever the amount ([IRS](https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return)). A W-9 before the first payment prevents this.

## If you get a 1099-NEC

The rule works the other way too. If clients pay you, a 1099-NEC shows your income, and you pay [self-employment tax](https://rightobooks.com/blog/self-employment-tax-explained/) on your profit. Report all your income, with or without a form. Many people pay that tax during the year with [quarterly estimated taxes](https://rightobooks.com/blog/quarterly-estimated-taxes/).

## Get your totals right in January

[Righto](https://rightobooks.com/) gives you a payment report for each contractor, split by account, so card payments are easy to take out. You can also ask your own AI agent, such as Claude Code, what you paid each contractor in 2026. Righto does not decide who needs a 1099 or file the forms. See [how agents work with Righto](https://rightobooks.com/agents/).

## Common questions

**Is the $2,000 per payment or per year?**
Per year, for each payee.

**What happened to the $600 rule?**
It still applies to payments made in 2025 and earlier. From 2027, the $2,000 may go up with inflation ([IRS instructions](https://www.irs.gov/instructions/i1099mec)).

**Do I file a 1099-NEC for my rent?**
No. Rent is not work. Business rent of $2,000 or more paid to a landlord that is not a corporation usually goes on Form 1099-MISC.

## What to do now

1. List every contractor you paid in 2026.
2. Ask each one for a [Form W-9](https://rightobooks.com/blog/form-w-9-explained/) if you do not have one.
3. Add up what you paid each one by check, cash or bank transfer. Leave out card and app payments.
4. Mark everyone at $2,000 or more, and every lawyer.
5. If you will file 10 or more forms, apply for an IRIS Transmitter Control Code.
6. Put February 1, 2027 in your calendar, with a reminder a week before. See the other [tax deadlines for 2027](https://rightobooks.com/blog/small-business-tax-deadlines-2027/).

[Righto](https://rightobooks.com/download/) is free, easy to use and needs no account.

## Sources

- [Form 1099-NEC and independent contractors](https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-nec-independent-contractors/form-1099-nec-independent-contractors), IRS
- [Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec), IRS
- [Am I required to file a Form 1099 or other information return?](https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return), IRS
- [E-file information returns with IRIS](https://www.irs.gov/filing/e-file-information-returns-with-iris), IRS