Hello,
As we approach year-end and begin preparing for tax reporting season, this is a reminder of the rules around Form 1099-NEC for payments made to contract workers for services performed in 2025.
If you need help preparing and filing 1099- NEC forms, please let us know.
It’s a service we have provided every January for over 20 years
Here are the rules you should know:
General Rule – Who Is Required to File a 1099-NEC
You are required to file Form 1099-NEC if all of the following apply:
– You paid $600 or more during 2025
– The payment was for services (not goods)
– The services were performed by a non-employee (independent contractor, freelancer, consultant, etc.)
– The payment was made in the course of your trade or business
– Payment was made to an individual, partnership, or LLC taxed as a sole proprietor or partnership
Common examples include subcontractors, freelance designers, bookkeepers, virtual assistants, marketers, and tradespeople.
Important Exceptions (When a 1099-NEC Is NOT Required)
You generally do not need to issue a 1099-NEC in the following situations:
– Payments to corporations, including LLCs taxed as C-corps or S-corps
– Exception: Payments to attorneys must be reported even if the law firm is incorporated
– Personal payments (non-business related)
– Payments made via credit card, debit card, PayPal, Venmo, Stripe, or other third-party processors
– These are reported by the processor on Form 1099-K, not by you
– Payments to employees (these belong on a W-2, not a 1099)
– Payments for goods or materials only (no service component)
Filing Deadline
– January 31, 2026
– Copies must be provided to contractors and filed with the IRS by this date
– This deadline applies whether you file electronically or by paper
Action Items
– Confirm you have a W-9 on file for each contractor
– Review total payments made in 2025
– Address missing or incorrect taxpayer information before filing
If you’re unsure whether a payment is reportable or want help preparing and filing 1099s correctly, feel free to reach out.