1099-NEC threshold: $2,000 from 2026, due February 1, 2027

For payments made in 2026, a startup files Form 1099-NEC for each person it paid $2,000 or more for services, up from $600 for earlier years. The IRS instructions say the threshold "may be adjusted for inflation beginning in calendar year 2027" (Instructions for Forms 1099-MISC and 1099-NEC (12/2026)).

The 2026 forms are due on February 1, 2027, to the IRS and to each contractor, because January 31, 2027 falls on a Sunday. This guide covers who gets a form, the payments that never need one, a worked example with five contractors, the deadline and e-filing, the penalties for returns due in 2027, and what to collect now.

What is the 1099-NEC threshold for 2026

The threshold is $2,000 for payments made in 2026. You file Form 1099-NEC for each person you paid at least $2,000 in the course of your business for services by someone who is not your employee, or for payments to an attorney. For payments made in 2025, reported in early 2026, the threshold was still $600.

The IRS instructions put the change this way: "for tax years beginning after 2025", the minimum reporting threshold for certain information returns rose to $2,000, and the same threshold applies to backup withholding on those payments (Instructions for Forms 1099-MISC and 1099-NEC (12/2026)). The December 2026 revisions of the forms and instructions are the ones to use for 2026 payments.

The threshold is per payee and per year. Add up everything you paid one contractor during 2026, across every invoice, and compare the total with $2,000. Because the test is what you paid during the year, the form follows the cash, even if your books recognize the expense in another month. A December invoice paid in January lands on the next year's form, which is one of the places where cash and accrual accounting give different answers.

Who needs a 1099-NEC and who doesn't

A 1099-NEC goes to individuals, sole proprietors, partnerships and single-member LLCs that are disregarded for tax, when you pay them $2,000 or more for services in a year. Most corporations do not get one. Attorneys are the main exception: a law firm gets a form even when it is a corporation.

The IRS lists the payments that do not need a Form 1099-NEC or 1099-MISC (Instructions for Forms 1099-MISC and 1099-NEC (12/2026)). The ones a startup meets most often:

• Payments to corporations, including an LLC taxed as a C or S corporation.
• Wages to employees, which go on Form W-2.
• Payments for merchandise, freight, storage and similar items.
• Payments by credit card or payment card, and third-party network transactions. These are reported on Form 1099-K by the payment settlement entity, not by you.

Two exceptions to the corporation rule matter for a startup. The exemption does not apply to payments for legal services, so attorneys' fees of $2,000 or more go in box 1a of Form 1099-NEC whether the law firm is a corporation or not. It also does not apply to medical and health care payments, which go on Form 1099-MISC.

For a single-member LLC that is disregarded for tax, the form names the owner on the first name line and the LLC on the second, with the owner's SSN or EIN (General Instructions for Certain Information Returns (2025)). An LLC taxed as a corporation is treated like any other corporation.

A worked example: five contractors, two forms

Take a startup's contractor payments for 2026. It paid five outside providers, and it has a Form W-9 on file for each one:

Of $97,800 paid to contractors, $60,000 goes on two Forms 1099-NEC. Under the $600 threshold of earlier years, the $1,800 designer would also have needed a form. The copywriter needs none from you at any amount, because a card payment is reported by the card processor.

The startup furnishes Copy B to the developer and the law firm and files the two forms with the IRS by February 1, 2027. With fewer than 10 information returns in the year, it may file on paper or electronically.

When is Form 1099-NEC due

Form 1099-NEC is due January 31, both to the IRS and to the recipient, on paper or electronically. When that day falls on a weekend or legal holiday, the due date moves to the next business day. January 31, 2027 is a Sunday, so 2026 forms are due Monday, February 1, 2027.

Both dates come from the Instructions for Forms 1099-MISC and 1099-NEC (12/2026), which cite section 6071(c) for the January 31 filing date and add that recipients must receive their statements by the same day. Form 1099-MISC runs later: February 28 on paper or March 31 electronically.

You must e-file if you are required to file 10 or more information returns during the year. The count covers all information return types together, not each form separately (General Instructions for Certain Information Returns (2025)). If an employee exercised an incentive stock option, the count also includes the Form 3921 owed for each exercise, which runs on its own calendar. The IRS's Information Reporting Intake System (IRIS) is a free online portal for e-filing Forms 1099 without special software.

The 1099s are one of several filings that land early in the year. Your Delaware franchise tax and annual report are due March 1, so it pays to collect both sets of numbers in the same January close.

What are the penalties for a late or missing 1099-NEC

For forms due in 2027, filing late costs $60, $130 or $340 per return depending on how late, and failing to furnish the contractor's copy costs the same amounts per statement. A form never filed and never furnished therefore costs $680 per contractor. Intentional disregard starts at $690 per return with no maximum.

The amounts for returns and statements due in 2027 are in Rev. Proc. 2025-32, sections 4.57 and 4.58:

Calendar-year maximums are lower for a business with average annual gross receipts of $5,000,000 or less over the three most recent tax years: $1,397,000 a year at the $340 tier, against $4,191,500 for larger businesses. Intentional disregard is the greater of $690 or 10% of the amounts that should have been reported, with no limit.

The general instructions also describe exceptions, including reasonable cause and a de minimis rule for corrections filed by August 1 (General Instructions for Certain Information Returns (2025)). Neither helps a form that was never filed because nobody tracked the payee.

Why you need a W-9 before the first payment

A Form W-9 gives you the contractor's legal name, tax classification and taxpayer identification number (TIN). The classification tells you whether a form is needed at all. Without the TIN, you may have to backup withhold 24% of reportable payments and send it to the IRS, and you are liable for amounts you should have withheld and did not.

Backup withholding applies when a payee fails to furnish a TIN, or when the IRS tells you the TIN is incorrect (General Instructions for Certain Information Returns (2025)). An attorney must supply a TIN whether or not it is a corporation, and if it does not, you must backup withhold on the reportable payments.

Collecting the W-9 before the first payment is far easier than chasing a contractor in January who has already been paid in full. LedgerIt ties every payment in your books to its payee, so the January list of who crossed $2,000 comes from the ledger rather than a search through bank statements.

What to do before January

• Collect a Form W-9 from every contractor before the next payment, and from every law firm.
• Total 2026 payments by payee from your books, excluding card payments, and mark everyone at $2,000 or more.
• Drop corporations except law firms and health care providers.
• Count your forms. At 10 or more information returns in total, you must e-file, and IRIS is free.
• Put February 1, 2027 on the calendar for both the IRS filing and the contractor copies.
• Fix mistakes within 30 days of the due date, when the penalty is lowest at $60 per form.