The 1099 Line Moved to $2,000. Who Still Gets a Form in January 2027?

2026-10-16 · RKube Services

For 2026 payments the 1099-NEC line is $2,000, not $600. Who still gets a form, what you need from each W-9, how to file, and the February 1, 2027 deadline.

The forms small businesses file this January are the first under a new rule. For payments made in 2026, a business generally issues Form 1099-NEC only when it paid a non-employee $2,000 or more for services during the year. For every earlier year, the line was $600.

That one change will drop a lot of small vendors off the list. It won't drop the deadline, which has no automatic extension, or the paperwork you need to file correctly. This guide walks through the decision for each payee, the filing options, and a January timeline, using examples from small businesses in Raleigh, Charlotte and Durham, NC.

Sources: the IRS Instructions for Forms 1099-MISC and 1099-NEC, Publication 1099, General Instructions for Certain Information Returns, and Internal Revenue Bulletin 2026-19 on the section 6041 threshold, all read in October 2026.

What changed, in plain terms

The One Big Beautiful Bill Act raised the base reporting threshold in section 6041 to $2,000 for payments made after December 31, 2025. The IRS applies it to the 2026 forms:

• Form 1099-NEC, box 1: nonemployee compensation of $2,000 or more.
• Form 1099-MISC, rents: $2,000 or more.
• Payments made before 2026: the old $600 threshold still applies, which matters if you're filing a late or corrected 2025 form.
• 2027 and later: the $2,000 figure gets an inflation adjustment starting in calendar year 2027, so don't hard-code it into your bookkeeping rules forever.

A few lines didn't move. Box 2 on the 1099-NEC (direct sales of consumer products for resale) is still triggered at $5,000, and a handful of 1099-MISC items keep their own amounts.

The 2026 deadlines

The IRS instructions list January 31 for the 1099-NEC. In 2027 that's a Sunday, so the deadline moves to the next business day. The 1099-MISC paper date is February 28 in the instructions, which also lands on a Sunday in 2027.

Publication 1099 is direct about extensions: for Forms W-2 and 1099-NEC, no automatic extension is available. Plan to file on time.

Deciding who gets a 1099-NEC: four questions per payee

Run each vendor through these in order. Stop at the first "no."

1. Was it a payment for services in your trade or business? Payments for goods, inventory or supplies don't go on a 1099-NEC. Personal payments (your house painter, if the house isn't a business asset) aren't reportable by your business either. Parts and materials billed as part of a service job do count with the service.

2. Is the payee someone other than an employee? Employee wages go on a W-2. If you're not sure whether a worker is an employee or a contractor, settle that before January, because it changes which form and which taxes apply.

3. Did you pay by check, cash, ACH or wire? Payments made by credit card, debit card or a third-party network go on Form 1099-K, filed by the payment settlement entity, not on your 1099-NEC. Third-party settlement organizations, the apps and processors, report only when a payee has over $20,000 and over 200 transactions, so many small contractors won't get a 1099-K either. That's their reporting question, not yours.

4. Is the payee a corporation? Payments to C and S corporations are generally exempt. The big exception: the instructions say the corporate exemption doesn't apply to payments for legal services, so attorneys get a 1099-NEC (box 1) even when their firm is incorporated.

If a payee clears all four and your total paid in 2026 is $2,000 or more, they get a form.

A worked example: a Charlotte property manager

A small property management company in Charlotte paid these people in 2026:

Two lessons come out of this table. First, entity type decides as much as the dollar amount, which is why the W-9 matters. Second, the landscaper is $100 under the line. One more invoice paid in December and they'd need a form, so total by payee through December 31, then decide.

What you need from each payee: the W-9

A completed Form W-9 gives you the payee's legal name, federal tax classification and taxpayer identification number (SSN or EIN). The name on the 1099 has to match the TIN, and the classification box answers question 4 above.

If a payee won't give you a TIN, Publication 1099 says payments may be subject to backup withholding at a 24% rate. You then deposit what you withheld and report it. It's much easier to require the W-9 before the first payment than to start withholding in December.

Tips that save time in January:

• Ask for the W-9 at onboarding, and keep it with the vendor record, not in someone's inbox.
• When a W-9 shows "LLC," look at the tax classification letter (C, S or P). An LLC taxed as an S corporation is treated as a corporation for this purpose; a disregarded single-member LLC is not.
• Use the payee's legal name, not their trade name, on line 1, with the business name on line 2.

How to file

You have three routes:

1. IRIS, the IRS Information Returns Intake System. Publication 1099 describes the IRIS taxpayer portal as a way to file information returns online at no cost. You can key forms in or upload a file.
2. Software or a payroll or bookkeeping provider that e-files for you.
3. Paper, using the red-ink scannable Copy A ordered from the IRS (downloaded copies aren't scannable), with a Form 1096 transmittal for each type of form.

Paper is allowed only for small filers. Since 2024, you must e-file if you're filing 10 or more information returns in total, counting all types together (1099-NEC, 1099-MISC, W-2s and others). A business with six contractors and five employees is at 11 and has to e-file.

States

Many states want a copy of 1099s or their own reconciliation. Some get 1099 data through the IRS Combined Federal/State Filing program and some require direct filing. Check your state revenue department's guidance before January. North Carolina, for example, has its own requirements for certain payments to nonresident contractors, separate from the federal form.

A January timeline

1. First week of January: close December in your books. Run a vendor payment report for all of 2026 showing payment method.
2. By January 10: run each payee through the four questions and the $2,000 test. Chase any missing W-9s.
3. By January 22: prepare forms and review names and TINs against W-9s.
4. By February 1: furnish copies to payees and file with the IRS (and your state, if required).
5. After filing: if a payee says an amount is wrong, check it against your records and file a corrected form promptly.

Questions owners ask about 2026 1099s

I paid a contractor $1,950. Should I file anyway? You're not required to for 2026 payments. Some businesses still issue a form voluntarily; it's extra work, not a violation. The payee owes tax on the income either way.

Does the $2,000 apply per invoice or per year? Per payee, for the whole calendar year. Add up all reportable payments to that payee.

I paid through Venmo for business, or PayPal. Do I issue a 1099-NEC? Generally no. Payments by card or through a third-party network are reported on Form 1099-K by the payment company, not by you.

Do I send a 1099 to an LLC? It depends on how the LLC is taxed. A disregarded or partnership LLC generally gets one. An LLC taxed as a C or S corporation generally doesn't, unless it's a law firm.

Can I get more time? For the 1099-NEC, there's no automatic extension. Plan around February 1.

This guide is general information as of October 2026, for 2026 payments. It isn't tax advice for your situation; check the IRS instructions for anything unusual.

RKube Services prepares and e-files 1099s as part of its bookkeeping work for small businesses in Raleigh, Durham and Charlotte, NC and across the US. More at rkubeservices.com.