1099 for Contractors: Filing Requirements for Independent Contractors

Employee vs. Independent Contractor

Before you can determine your filing obligations, you need to correctly classify your workers. The distinction between an employee and an independent contractor has significant tax and legal implications.

The IRS evaluates three categories when determining classification:

• Behavioral control — Does the business direct how, when, and where the worker performs their tasks? If so, the worker is more likely an employee.
• Financial control — Does the worker invest in their own equipment, have the opportunity for profit or loss, and offer services to the open market? These factors suggest contractor status.
• Relationship type — Are there written contracts, employee benefits, or an expectation of a permanent relationship? These can indicate employment.

Misclassifying employees as independent contractors can result in significant penalties, back taxes, and interest charges. When in doubt, consult a tax professional or review IRS Publication 15-A.

When to Issue a 1099-NEC

You must file Form 1099-NEC (Nonemployee Compensation) for each independent contractor to whom you paid $600 or more during the tax year. The payment must have been made:

• To a person or entity that is not your employee
• For services performed in the course of your trade or business
• To an individual, partnership, or LLC (not an S-corp or C-corp, with limited exceptions)
• Via cash, check, or direct deposit (not via credit card or third-party payment networks)

Common examples of contractor payments that require a 1099-NEC include fees paid to consultants, freelance writers, graphic designers, IT professionals, bookkeepers, and subcontractors.

Collecting W-9 Forms

Before making any payment to a contractor, you should collect a completed Form W-9 (Request for Taxpayer Identification Number and Certification). The W-9 provides:

• The contractor's legal name and business name
• Their taxpayer identification number (SSN or EIN)
• Their federal tax classification (individual, LLC, corporation, etc.)
• Certification that they are not subject to backup withholding

Collecting W-9s at the start of the engagement saves significant time and prevents scrambling at year-end. If a contractor refuses to provide a W-9, you may be required to withhold 24% of their payments as backup withholding.

Payment Thresholds and Exceptions

The standard threshold for 1099-NEC reporting is $600 in aggregate payments per recipient during the tax year. However, several important exceptions apply:

• Payments to corporations — You generally do not need to issue a 1099 to C-corporations or S-corporations. However, payments to attorneys and for medical/health care services must be reported regardless of corporate status.
• Card and third-party network payments — Payments made through credit cards, debit cards, PayPal, Venmo (business), or similar platforms are reported by the payment processor on Form 1099-K.
• Personal payments — Payments made for personal, non-business purposes do not require a 1099.

For more detail on entity-type rules, see our guide on issuing 1099s to LLCs.

State Filing Requirements

In addition to federal filing, many states require you to submit copies of 1099 forms to state tax agencies. Requirements vary by state:

• Some states participate in the Combined Federal/State Filing Program, which allows the IRS to forward 1099 data to participating states automatically.
• Other states require separate filings directly with the state revenue department.
• State filing deadlines may differ from federal deadlines.
• Some states have their own withholding requirements for nonresident contractors.

Check with your state tax agency or your accountant to confirm your state-level obligations.

Filing Deadlines

For the 2026 tax year, the key 1099-NEC deadlines are:

• January 31, 2027 — Deadline to furnish copies to recipients.
• January 31, 2027 — Deadline to file with the IRS (both paper and electronic).

Unlike the 1099-MISC, which has staggered deadlines, the 1099-NEC has a single due date for both recipient and IRS copies. Late filing can result in significant penalties.

Frequently Asked Questions