Key Takeaways
- For payments made in 2026, the reporting threshold for Form 1099-NEC and most 1099-MISC payments rises from $600 to $2,000. It will adjust for inflation starting in 2027.
- The 2026 forms add new boxes for qualified tips and overtime, and some boxes have been renumbered. Any saved templates or import files need updating.
- The IRS is retiring its FIRE filing system. If you file directly, you’ll need an IRIS Transmitter Control Code (TCC), and approval can take up to 45 calendar days. Apply now.
- Fewer forms doesn’t mean less discipline. Keep collecting W-9s from every vendor before the first payment.
Every January, 1099s land on the desks of business owners, finance teams, and nonprofit leaders, usually at the same time as W-2s and year-end close. When we first took over 1099 filing for Rea’s clients, the process was spread across several software platforms. Today the firm runs on one system and one process, and the lessons we learned along the way are the ones we share with clients every year. This year brings changes that haven’t happened in decades, so here’s what to know before filing season arrives.
Prefer to watch? This article draws from our recent webinar, The 1099 Playbook: The Questions We Hear Every Year, Answered Under Today’s Rules. Watch the on-demand recording to hear us walk through each change, common coding mistakes, and our year-end checklist in more detail.
The Basics: Who Files and Who Receives
A Form 1099 is an annual information return that reports what your organization paid to another business or individual for services, rent, and other payments. The IRS uses it to confirm that recipients report that income on their own returns.
Filing isn’t limited to for-profit businesses. Nonprofits and government entities must file too, because the requirement applies to payments made in the course of a trade or business, regardless of tax status. Personal payments, like hiring someone to work on your home, aren’t reportable.
On the receiving side, partnerships, sole proprietors, and individuals generally get a 1099. Corporations are generally exempt, with one important exception: attorneys receive a 1099 whether they’re incorporated or not. LLCs are the tricky group, since the name alone doesn’t tell you how they’re taxed. That’s what the W-9 is for.
The Threshold Moved for the First Time in 70 Years
Under the One Big Beautiful Bill Act, the reporting threshold for Form 1099-NEC and most Form 1099-MISC payments rises from $600 to $2,000 for annual total payments made on or after January 1, 2026. Forms filed in January 2026 for the 2025 tax year still used the $600 threshold. Starting in 2027, the threshold will adjust for inflation, so $2,000 may only last a year.
For most organizations, this means fewer forms, often to smaller vendors like office cleaners and landscapers. It doesn’t change the underlying process, though. Recipients still owe tax on that income whether or not they receive a form.
A few things didn’t change. Most other 1099 types keep their own thresholds. Deadlines and e-filing rules stay the same. States don’t automatically follow the federal threshold, so if you file in more than one state, check each state’s rules before filing.
New Boxes on Familiar Forms
The 2026 Forms 1099-NEC and 1099-MISC include new boxes for qualified cash tips, a Treasury occupation code for tipped work, and qualified overtime pay. On the 1099-NEC, nonemployee compensation changes from Box 1 to Box 1a. Even if you never report tips or overtime, any template, spreadsheet, or import file that maps to box numbers needs updating. Make sure whoever runs your 1099 batch knows the boxes have moved.
W-9s: Collect Early, Collect Always
Ask for a W-9 when a vendor starts work, ideally before the first payment. You can’t know in June who will cross the threshold by December. It also gives you leverage, because collecting a W-9 is much easier before a payment goes out than after.
Pay close attention to the name and taxpayer identification number (TIN). The name on line 1 must match the TIN. Sole proprietors who file a Schedule C should provide their individual name and Social Security number, even if they have an EIN. Businesses should report their EIN with their business name. Mismatched names and TIN will result in a notice from the IRS.
The Mistakes We See Most Often
- Services in Box 3 of the 1099-MISC. Since 2020, payments for services belong on the 1099-NEC. Box 3 (“other income”) is for rare situations, like a grant, prize, or a gifted vehicle.
- Attorney payments on the wrong form. Legal services go on the 1099-NEC. Gross proceeds, such as settlement payments paid to an attorney, go on the 1099-MISC.
- Equipment rental reported as services. Rent, including equipment rent, belongs in Box 1 of the 1099-MISC. We see this often with manufacturers and contractors.
- Reporting net instead of gross. If you withhold federal tax, report the full amount before withholding.
Filing, Deadlines, and Penalties
If your organization files 10 or more information returns in total, including all 1099s, W-2s, and 1098s combined, you must file electronically. Most organizations reach that number quickly.
If you file directly with the IRS, keep in mind that the IRS is retiring its FIRE system. Beginning January 1, 2027, IRIS will be the only direct e-filing option. FIRE and IRIS use different TCCs, so a FIRE code won’t work in IRIS. The IRS asks filers to allow up to 45 calendar days to approve an IRIS application, so there’s no reason to wait. Apply today.
Many organizations file through a third-party platform instead. Rea uses Tax1099 for client filings, and other platforms are available too, including QuickBooks with a payroll subscription. Third-party platforms charge fees, but they handle the transmission for you.
Recipient copies are generally due January 31. In 2027, that date falls on a Sunday, which moves the deadline to Monday, February 1. Form 1099-NEC is due to the IRS on the same date. Most other 1099s are due to the IRS by the end of February if filed on paper, or by March 31 if filed electronically.
Penalties are assessed per form, not per business or form type, and they increase in tiers: filing within 30 days of the deadline, filing after 30 days but by August 1, and filing after August 1. Intentionally not filing carries the steepest penalty. The IRS adjusts these amounts each year, and they add up quickly across a large batch.
TIN Matching: Cheap Insurance
TIN matching checks each vendor’s name and TIN against IRS records before you file. You can run it yourself through the IRS, which requires an ID.me account and an application, or through many filing platforms for a fee. Keep a copy of your results. If a TIN mismatch notice arrives, those results show due diligence and can support a penalty waiver.
Mismatch notices (CP2100 and CP2100A) typically arrive in April or October, often for filings from the prior year. Most require you to send a “B notice” to the vendor requesting corrected information. If the issue isn’t resolved, you’ll need to begin backup withholding on future payments.
Your Year-End Checklist
- Pull your vendor list and identify everyone who may need a 1099.
- Collect missing W-9s now, not in January.
- Run TIN matching on your W-9 information.
- If you file directly, apply for your IRIS TCC today.
- Update your software for the new threshold and box numbers.
- Review last year’s coding. If services ended up in 1099-MISC Box 3, fix the process before you repeat it.
Let’s Build Together
Filing software can make the process easier, but it won’t tell you when something doesn’t look right. Whether you’d like a second set of eyes on your coding or prefer to hand off 1099 filing entirely, Rea’s advisors can help. Watch The 1099 Playbook on demand to hear the full conversation, or connect with a Rea advisor to talk through your 1099 process.
About the Authors
Marie Iszory, Lead Accounting Specialist
Marie works from Rea’s Lima office and helps keep the firm’s 1099 process running smoothly behind the scenes. She once handled every 1099 for the Lima office herself and now helps plan the firmwide process clients rely on each January. Questions about your 1099s? Reach out to Marie or your Rea advisor.
Sheri Petty, Lead Accounting Specialist
Sheri inherited Rea’s 1099 process during her first January with the firm and helped consolidate it into a single platform and repeatable process. She helps clients get W-9s, coding, and TIN matching right before filing season begins. Connect with Sheri to talk through your year-end readiness.
