Form 1099-NEC
Authority: IRC §6041A; Form 1099-NEC
Form 1099-NEC reports nonemployee compensation: what a business paid an independent contractor, freelancer, or unincorporated service provider during the year. Historically the filing threshold was $600; legislation enacted in 2025 raised it to $2,000 for payments made after 2025, indexed going forward. The form is due to both the recipient and the IRS by January 31, one of the earliest deadlines of tax season. Payments to corporations are generally exempt (attorneys are the notable exception), and payments made by credit card or through platforms like Stripe are excluded because the processor reports them on Form 1099-K instead, a distinction that prevents double reporting. The compliance workflow is to collect a Form W-9 from every vendor before the first payment; a missing W-9 can force 24% backup withholding. Penalties for late or missing forms are assessed per form and scale with lateness, and intentional disregard removes the cap entirely.
Example
An agency pays a freelance designer $18,000 by ACH during the year. It collects a W-9 up front and files a 1099-NEC by January 31. A separate $5,000 paid to the same designer via credit card is not included; the card processor reports it.
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