Businesses report payments for services to non-employees (individuals, partnerships and most LLCs, but generally not corporations) on Form 1099-NEC, due to the recipient and the IRS by January 31. Payments for rents and certain other items go on Form 1099-MISC. Payments by credit card or through payment networks are reported by the processor on Form 1099-K instead.
For payments made in 2026, the reporting threshold is $2,000 per payee per year (raised from $600 by 2025 legislation amending IRC §6041). Thresholds apply by the year the payment was made.
Why it matters
Contractors pay hundreds of subs and vendors. Missing W-9s, wrong entity types and materials mixed into service payments cause most 1099 errors and IRS penalty notices.
Worked example
Vendor B, an individual sub, is paid $2,500 for services in 2026: a 1099-NEC for $2,500. Vendor A is paid $1,800 for services and $900 for materials marked not reportable: $1,800 is under the threshold, so no 1099 (illustrative).
Common mistakes
- Reporting materials along with labor.
- Including card payments that the processor already reports.
- Waiting until January to collect W-9s.
How os.construction handles it
In the accounting preview, each vendor and each bill line carries 1099 settings, the 1099 tab totals reportable payments by box, and filing data exports at year end. Confirm your filing with your tax advisor. See Accounts payable.