2026 1099 Rules for Contractors: The New $2,000 Threshold and What You Need to File
Quick Answer
If you paid a subcontractor $2,000 or more in 2026, you file a Form 1099-NEC for them by February 1, 2027. The threshold rose from $600 to $2,000 for payments made in 2026, the first change since 1954, and it applies to Form 1099-MISC payments too. Fewer forms to file, same deadline, same W-9 requirement for every sub you pay.
Most of the 1099 coverage this year is written for the people receiving the forms. If you hire subs, you are on the other side of that transaction, and you are the one with a filing deadline. Here is what you owe, who you owe it to, and what to take care of before the year closes.
What Changed
For payments made in 2026, the reporting threshold for nonemployee compensation went from $600 to $2,000. The same $2,000 threshold applies to Form 1099-MISC categories like rents, prizes and awards, and other income payments.
The threshold counts your total payments to one person for the year, not per job or per invoice. Three $800 payments to the same sub add up to $2,400, and that sub gets a 1099-NEC.
Who You File For
You file a 1099-NEC for any subcontractor, freelancer, or other non-employee you paid $2,000 or more for services in 2026. You file a 1099-MISC for rent payments of $2,000 or more to a landlord or equipment lessor. Payments to attorneys follow their own rules, so report those regardless of the amount.
You generally skip corporations. You also skip anything you paid by credit card, debit card, or a payment app. Those get reported by the processor on a Form 1099-K, and including them on your 1099-NEC double-reports the same income to your sub.
What to Do Before December 31
Run a vendor payment report - Total what you paid each sub this year and flag everyone at $2,000 or more. Pay attention to anyone sitting just under the line, because one December payment can push them over.
Collect the missing W-9s now - You need a W-9 from every sub you pay, regardless of amount. Without a taxpayer ID number, you may be required to apply backup withholding at 24%, and if you have already paid the sub in full, that comes out of your pocket. Subs are also far more responsive in December than they are in January.
Separate payments by method - Split out anything paid by card or through a payment app before you add up totals. Only checks, cash, and bank transfers count toward the $2,000.
Clean up your vendor records - Legal name, TIN, and address need to match the W-9 exactly. Mismatches trigger IRS notices and a round of corrected forms you do not want to be doing in February.
The Deadline
Form 1099-NEC is due to your subcontractors and to the IRS by February 1, 2027. (January 31 falls on a Sunday, so the deadline moves to the next business day.) If you are filing 10 or more information returns total, including W-2s, you have to file electronically.
Penalties are charged per form and increase the longer you wait, so filing late on purpose is the expensive option.
What Did Not Change
Fewer forms does not mean fewer records. You deduct what you paid your subs whether or not a 1099 was required, and your books are what support that deduction if anyone asks. The higher threshold changed your filing obligation, not your bookkeeping.
Frequently Asked Questions
I paid a sub $1,800. Do I have to file?
No. You can still file one if you want to, and some businesses do for consistency. Either way, keep the W-9 and your payment records, and take the deduction.
What if I paid a sub partly by check and partly by card?
Add up only the checks. If those reach $2,000, file a 1099-NEC for that amount. The card payments get reported by the processor.
My sub is an LLC. Do they get a 1099?
Check their W-9. A single-member LLC or partnership gets a 1099. An LLC taxed as an S corp or C corp generally does not.
I found a sub I should have filed for after the deadline. What now?
File as soon as you find it. Penalties scale with how late the form is, so a form filed in February costs far less than one filed in August.
Will the $2,000 threshold change again?
It is adjusted for inflation after 2026, so check the current amount each year.
Getting Your 1099s Handled
The businesses that dread January are usually the ones chasing W-9s in the last week of the month. The ones that do not have their vendor list cleaned up before the holidays.
At Oddo Accounting Solutions, we handle 1099 prep for our bookkeeping clients: we total your vendor payments, tell you exactly who you are filing for, track down the W-9s you are missing, and file the forms. If you would rather not spend your January on this, reach out, and we will take it from here.
Key Takeaways
• The reporting threshold for 1099-NEC and most 1099-MISC payments rose from $600 to $2,000 for payments made in 2026.
• The threshold applies to your total payments to one person for the year, not to individual jobs.
• You need a W-9 from every sub you pay, no matter the amount.
• Payments made by card or payment app are reported by the processor, not by you.
• Forms are due to subs and the IRS by February 1, 2027, and penalties grow the longer you wait.
Disclaimer: This article is provided for general informational purposes only and does not constitute tax, legal, or accounting advice. Oddo Accounting Solutions is not a CPA firm and does not provide audit, review, or attest services, and no opinion or other form of assurance is expressed on any financial information. Please consult us about your specific situation before acting on anything described here.
