1099-NEC & 1099-MISC filing requirements 2026: Accountant's compliance checklist
Stay ahead of 2026's 1099 changes and file with confidence for every client.
Written by Ebony-Storm Halladay — Freelance accounting copywriter, 10 years. Read Ebony's full bio
Published Thursday 11 June 2026
Table of contents
Key takeaways
- The One Big Beautiful Bill Act raised the 1099-NEC and 1099-MISC reporting thresholds to $2,000 for the 2026 tax year, with inflation adjustments starting in 2027.
- Payments made via credit card or third-party platforms like PayPal and Venmo are excluded from 1099-NEC and 1099-MISC reporting, as they're reported through 1099-K instead.
- Late or incorrect 1099 filings carry penalties of up to $340 per form, and the longer you wait to correct them, the higher the cost to your clients.
- You can streamline every step of the 1099 process, from W-9 collection to e-filing, with accounting software that connects directly to the IRS.
What are 1099 filing requirements?
For the 2026 tax year, the One Big Beautiful Bill Act raised the Internal Revenue Service (IRS) reporting threshold for both 1099-NEC and 1099-MISC forms from $600 to $2,000. The 1099-MISC threshold is also $2,000 for payment types like rent and prizes, and $10 for royalties or broker payments.
Payments made via credit card or third-party platforms such as PayPal and Venmo don't need to be reported on a 1099-NEC or 1099-MISC. These transactions are reported by the payment processor on form 1099-K instead.
Deadlines vary depending on the specific form, and where the 1099s are being sent, which can mean a last-minute rush for your practice if your clients aren't prepared to file on time. For instance, 1099-MISC forms are due with the individual by January 31, and with the IRS by February 28. For specific e-filing thresholds and deadlines, see the deadlines and e-filing rules section below.
For practices, taking care of 1099s is about more than form filing. You also need to make sure clients are gathering contractor information, including Taxpayer Identification Numbers (TINs), entity types, and whether they're subject to withholding, through the W-9 form.
Who must file 1099-NEC vs 1099-MISC?
The 1099-NEC filing requirements mean that any clients who pay contractors or freelancers more than $2,000 in 2026 must file this form. The $2,000 threshold is also in place for the 1099-MISC form. The $2,000 threshold might be reached in a single payment, or a series of payments to the individual throughout the year.
Alongside freelancers and contractors, if your clients use lawyers or other independent professional services, including accounting or bookkeeping services you provide, they may also need to submit 1099-NECs for these payment types to the IRS by the January 31 deadline. The $2,000 threshold applies to each individual contractor, freelancer, or person paid who isn't an employee.
If a vendor fails to provide a valid TIN on their W-9, the payer may be required to apply backup withholding at 24% on payments to that vendor. It's worth flagging this to clients early, as it adds complexity to their year-end reporting.
The 1099-MISC filing requirements include a range of payment types that count towards the $2,000 threshold. They are:
- rents
- prizes and awards, and some non-government grants
- other income payments
- generally, the cash paid from a notional principal contract to an individual, partnership, or estate
- any fishing boat proceeds
- medical and healthcare payments
- crop insurance proceeds
- gross proceeds paid to an attorney
- section 409A deferrals or nonqualified deferred compensation
There's also a separate 1099-MISC threshold for royalties and broker payments in lieu of dividends or tax-exempt interest, which is $10. The full list of 1099-MISC payment types is available on the IRS website.
What are the 1099 deadlines and e-filing rules?
For the 2026 tax year, the deadlines for filing 1099-NEC and 1099-MISC are:
- 1099-NEC: January 31, 2027 for the IRS and individual.
- 1099-MISC: January 31, 2027 to the individual paid, February 28 to the IRS by paper, or March 31 if filing electronically.
In some states, you may also need to file 1099s with your clients' state government as well as the IRS. Be sure to check local requirements for 1099 filing.
IRS penalties for late or incorrect 1099 filings range from $60 to $340 per form, depending on how late the correction is made. Penalties increase the longer you wait, so filing on time and double-checking accuracy before submission can save your clients significant costs.
New rules for 1099 reporting mean clients with more than 10 forms to file are now required to use e-filing. You and your clients can either use the IRS's IRIS system for e-filing, or third-party software. Modern accounting software that supports e-filing is a good option, because you can use the same feature for all of your clients, and financial records of contractors and individuals paid are already stored in the system. Xero's accounting software supports e-filing, and also makes it possible to request vendor information and track the progress of 1099 submissions in one place.
How to run a 1099 checklist in your practice
With proper organization, you can meet all of the 1099 filing requirements 2026 throws your way. Get started on this checklist in the fall, so you have what you need before the deadlines in early 2027.
- Review vendor information. Check that your clients have contractor and vendor information up to date, including addresses, Taxpayer Identification Numbers (TINs), and total payments.
- Request outstanding W-9s. If vendor information is missing or out of date, request completed W-9s from your clients' vendors, or ask clients to reach out to vendors directly.
- Reconcile vendor payments. Make sure all vendor payments have been reviewed against the general ledger and reconciled correctly, ready to fill in 1099 forms.
- Prepare 1099s in software or with IRS e-filing. Once you have the correct vendor information from clients, and all payments have been reconciled, you're ready to prepare 1099s in third-party software or through IRIS e-filing.
- Send 1099s to individuals and the IRS. Completed 1099s can be submitted to the IRS and individuals through IRIS or third-party software.
How you can automate 1099s with Xero
You and your clients need to work together to get 1099s completed on time. So, if clients delay gathering W-9 information, it can slow down the whole process. Payments to freelancers, contractors, and other individuals who aren't employed by the company need to be tracked year-round for fast and accurate 1099 filing.
Xero accounting software simplifies every step of the 1099 filing process, with features that enable:
- W-9 collection: You can request W-9s from your clients' vendors from inside Xero, by generating a secure link they can use to fill out the form. When the information is submitted, it automatically appears in their contact information, in Xero. Plus, you can view all W-9 information in one place, to easily spot missing information.
- 1099-NEC and 1099-MISC preparation: Create contact groups for 1099-NEC and 1099-MISC in Xero, so that once payment reconciliations are up to date, 1099 forms are automatically filled out for you, ready to review and submit. Missing details are flagged in the alerts column so you can spot when information needs updating.
- E-filing with the IRS and individuals: Easily e-file in bulk, as soon as 1099s are ready, with Xero's direct connection to the IRS. You can also send 1099 forms to individuals from Xero.
What changed for 1099 filing in 2026
The biggest change for the 2026 tax year is the threshold increase. The One Big Beautiful Bill Act raised the 1099-NEC and 1099-MISC reporting thresholds from $600 to $2,000. This means fewer forms for many of your clients, but it doesn't change the need to track payments year-round, especially for contractors who may still exceed the new threshold.
Starting in 2027, the IRS will adjust 1099 thresholds for inflation annually. This means the $2,000 figure won't stay fixed, so it's worth building processes that can adapt to shifting thresholds each year rather than hard-coding a specific dollar amount into your workflows.
The One Big Beautiful Bill Act also reverted the 1099-K threshold for third-party payment platforms to $20,000 in gross payments and 200 transactions per year, reinstating the pre-2024 rules. If your clients receive payments through platforms like PayPal, Venmo, or credit card processors, the higher threshold means fewer 1099-Ks to reconcile. Keep in mind that 1099-K amounts shouldn't be double-reported on a 1099-NEC or 1099-MISC.
Join the partner program
Make tax season less stressful with one piece of software for handling W-9s, 1099 preparation, and e-filing. With Xero, you can take care of 1099s for your whole client base, and submit directly to the IRS. Plus, creating 1099 reports throughout the year is simple, so you can see if clients are up to date, and what's left to do before the deadlines.
FAQs on 1099 filing requirements
Here are answers to some frequently asked questions about 1099 filing requirements.
Do you issue a 1099 to an LLC or corporation?
Generally, you don't issue a 1099 to an LLC or corporation unless it's for the provision of legal services (for example, payments or gross proceeds to attorneys). Payments to corporations for legal services must be reported with a 1099.
Are payments to foreign contractors reportable on 1099-NEC?
Do you issue a 1099 if total payments are below the threshold?
No, you don't need to issue a 1099 if a contractor's total payments are below the threshold.
Do reimbursements belong on a 1099?
It depends. If the contractor covers the expense and provides receipts, and your client reimburses the cost, this doesn't count as compensation and shouldn't be included on a 1099. But if a client covers costs that the contractor doesn't substantiate, for instance a flat amount paid towards travel expenses, then this does count as non-employee compensation. It's worth checking IRS guidance for specific cases.
How do you correct a filed 1099 without penalties?
If you file a 1099 and notice a mistake, file a corrected 1099 as soon as possible, ideally before the deadline to avoid a penalty. How you file a corrected form depends on the software you used. The IRS offers specific guidance for filing corrected 1099s with IRIS, but if you use Xero, it's as simple as selecting the 1099 form that needs adjusting, making the changes, and filing the correction with the IRS.
What are the penalties for late 1099 filing?
IRS penalties for late 1099 filings depend on how quickly you correct the issue. If you file within 30 days of the deadline, the penalty is $60 per form. After 30 days but before August 1, it increases to $130. Filing after August 1 or not filing at all brings the penalty up to $340 per form. For intentional disregard of filing requirements, there's no cap on the penalty amount.
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