1099s and W-9s for contractors: a simple guide for small businesses (2026)

If you pay freelancers, subcontractors, cleaners, or other independent workers in your business, you probably need to send them a Form 1099-NEC after the year ends. The good news: if you collect the right paperwork now, January will be much easier. This guide explains who gets a 1099, what changed for 2026, and how to collect W-9s before the rush.

What is a 1099-NEC, and who needs one?

Form 1099-NEC reports «nonemployee compensation,» meaning money your business paid to someone who is not your employee. According to the IRS, you generally need to file one when, as part of your trade or business, you paid someone for:

• Services by a person who is not your employee (including parts and materials they supplied with the job).
• Legal services from an attorney or law firm.

A few things usually do not need a 1099-NEC:

• Personal payments. Paying a painter for your own home is not a business payment.
• Most payments to corporations. Payments to a corporation are generally exempt. The big exception is attorneys’ fees, which are reportable even if the law firm is a corporation.
• Payments by credit card, debit card, or payment apps that count as third-party networks. The IRS says these are reported on Form 1099-K by the payment company, not on your 1099-NEC.
• Wages to employees. Employees get a W-2, not a 1099.

What changed for 2026: the $2,000 threshold

For many years the rule was $600. For payments made in 2026 and later, the IRS reporting threshold for Form 1099-NEC (and for rents on Form 1099-MISC) is now $2,000. Starting in 2027, that amount will be adjusted for inflation.

So, for the 1099s you send in early 2027 (covering 2026), you generally need one for each eligible contractor you paid $2,000 or more during 2026. Keep good records of every payment anyway: the total adds up quickly when you pay the same person every month.

One exception: if you had to apply backup withholding to a contractor (see below), you must file a 1099-NEC for that person no matter how small the payment was.

Collect a W-9 before you pay

Form W-9 is how you get a contractor’s legal name, business type, address, and taxpayer identification number (an SSN, ITIN, or EIN). You keep it in your files. It is not sent to the IRS.

The best habit is simple: no W-9, no first payment. Asking in January, after you already paid someone all year, is when people stop answering. A few tips:

• Use the current Form W-9 from irs.gov.
• Check that the name matches the tax ID. If a contractor works under a business name, you need the exact name tied to that number.
• Collect and store W-9s securely. They contain sensitive ID numbers, so avoid regular email, text, or WhatsApp. Use a secure portal or hand delivery, and keep them in a locked or encrypted place.
• Ask for a new W-9 if a contractor changes their name, address, or business structure.

What if they never give you a tax ID? The IRS says that if no TIN is provided, you must begin backup withholding immediately on reportable payments. The backup withholding rate is 24%, and you send that money to the IRS. That is one more reason to get the W-9 up front.

Key deadlines for 2026 forms

• Form 1099-NEC: due to the contractor and to the IRS by January 31. Because January 31, 2027 falls on a Sunday, the deadline moves to the next business day, Monday, February 1, 2027.
• Form 1099-MISC (for example, rent of $2,000 or more): copy to the recipient by January 31 (February 1, 2027 this cycle). It is filed with the IRS by February 28 on paper or March 31 if filed electronically.

Paper or electronic? If you file 10 or more information returns in total (1099s and W-2s combined), you must file electronically. The IRS offers a free online system called IRIS (Information Returns Intake System) where you can type in the forms or upload a file. Filing late or with wrong information can lead to penalties, so it pays to start early.

A simple year-end checklist

1. Make a list of everyone your business paid in 2026 who is not an employee.
2. Add up what you paid each one by check, cash, Zelle, or bank transfer. Leave out card and third-party network payments that are reported on Form 1099-K.
3. Mark anyone at $2,000 or more, plus any attorney you paid.
4. Check you have a complete W-9 for each of them. Request missing ones now, in October or November.
5. Prepare and send the 1099-NECs by February 1, 2027.

If your books are up to date, steps 1 to 3 take minutes. If they are not, this is where most January stress comes from.

How we can help

At Toro Taxes Hunters Creek, we keep your books organized all year so your contractor payments are already tracked when 1099 season arrives. Monthly bookkeeping starts at $275/month, month to month, with a free 15-minute review to see where your books stand. See our bookkeeping plans or talk to us.

Toro Taxes Hunters Creek, 12701 S John Young Pkwy, Suite 109, Orlando, FL 32837. Phone: (407) 346-8957.

This guide is general information, not tax advice for your specific situation.