1099 Filing Requirements
What transactions qualify to report on Form 1099-MISC?
According to the IRS, you generally must file Form 1099-MISC for each person to whom you have paid during the year:
At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least the applicable reporting threshold in:
Rents (box 1);
Prizes and awards (box 3);
Other income payments (box 3);
Generally, cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
Medical and health care payments (box 6);
Crop insurance proceeds (box 9);
Gross proceeds paid to an attorney (box 10); or
Section 409A deferrals (box 12).
The applicable reporting threshold is generally $600 for payments made before 2026 and $2,000 for payments made in 2026. For payments made after 2026, the $2,000 threshold is subject to annual inflation adjustments.
You must also file Form 1099-MISC for each person from whom you have withheld federal income tax under the backup withholding rules, regardless of the amount of the payment.
What transactions qualify to report on Form 1099-NEC?
File Form 1099-NEC for each person to whom you have paid at least the applicable reporting threshold during the year for:
Services performed by someone who is not your employee, including payments for parts and materials related to the services; or
Payments to an attorney for legal services.
The applicable reporting threshold is generally $600 for payments made before 2026 and $2,000 for payments made in 2026. For payments made after 2026, the $2,000 threshold is subject to annual inflation adjustments.
You must also file Form 1099-NEC for each person from whom you have withheld federal income tax under the backup withholding rules, regardless of the amount of the payment.
Who qualifies as a “person” I need to issue a 1099 to?
For 1099 reporting purposes, a person is not just an individual. A person may be an individual, partnership, LLC, or certain other business entity. Generally, payments to corporations are exempt from Form 1099 reporting. However, there are important exceptions, including certain payments for medical and health care services and payments to attorneys.
Am I required to report?
Report payments on Form 1099 only when they are made in the course of your trade or business. Personal payments generally are not reportable.
For these purposes, nonprofit organizations and certain tax-exempt organizations are also subject to information reporting requirements. Therefore, the filing requirements are not limited to for-profit businesses.
Generally, if you make a reportable business payment to a person or unincorporated business that meets or exceeds the applicable reporting threshold, you may be required to file a Form 1099. The reporting threshold is generally $600 for payments made before 2026 and $2,000 for payments made in 2026, with inflation adjustments applying after 2026.
Penalties
Forms 1099 must be filed with the IRS and furnished to recipients by the applicable due dates. Form 1099-NEC is generally due to both the IRS and the recipient by January 31 of the following year. Due dates for Form 1099-MISC may vary depending on the filing method and type of payment reported.
Penalties may apply for failing to timely file a correct information return with the IRS or failing to timely furnish a correct statement to the recipient. The penalty amount depends on how late the return or statement is filed or corrected and is adjusted periodically for inflation. Intentional disregard of the filing requirements can result in substantially higher penalties with no maximum penalty.
The penalty for failing to file a correct information return with the IRS is separate from the penalty for failing to furnish a correct statement to the recipient. Therefore, failure to properly file a required Form 1099 with the IRS and failure to provide the required Form 1099 to the recipient may result in two separate penalties.
If you are looking for a CPA or have any questions about accounting services, please contact me, Catherine Roe, at catherine@cowartroecpa.com or 504-252-0652. I would love to work with you!