As the year winds down, one task quietly decides how smooth your January will be: issuing 1099s to the contractors you paid. This year brings a meaningful change worth knowing, along with a few things that have not changed at all. Here is what to do before year-end.
What changed: the 1099 threshold is now $2,000
For payments made in 2026, the reporting threshold for Form 1099-NEC (and 1099-MISC) rises from $600 to $2,000. That is the first change to this threshold since 1954, and it means you are generally required to issue a 1099-NEC only to a contractor you paid $2,000 or more for services this year. Beginning in 2027, the threshold will adjust for inflation. For many small businesses, the change reduces the number of forms you have to file.
What did not change
The deadline, the corporate exemption, the card-payment rule, and your contractor's tax obligation all stay the same, and these are the parts that tend to trip people up:
- The deadline. 1099-NEC forms are due to both the recipient and the IRS by January 31. For 2026 forms, January 31, 2027 falls on a Sunday, so the deadline is Monday, February 1, 2027.
- Corporations are still generally exempt, with the notable exception of payments to attorneys.
- Card and app payments. Payments made by credit card or through a third-party app such as PayPal are reported by the processor on Form 1099-K, not by you. Leave those out of your 1099-NEC totals so you do not double-report.
- Your contractor's tax. Income is still taxable to your contractor whether or not a form is issued. The higher threshold changes your filing duty, not their tax.
Why you should still collect W-9s now
Collect a Form W-9 from every contractor now, because you cannot know in October which contractors will cross $2,000 by December 31. This is the part that matters most for your books, and it is the simplest protection there is: get each W-9 well before year-end, capturing the contractor's legal name, taxpayer ID, address, and entity type.
Do this now and you are ready to file for anyone who crosses the line, without chasing paperwork in January when contractors are harder to reach. It also guards against a common headache: a missing or mismatched taxpayer ID can trigger IRS notices and backup withholding obligations later.
Your October 1099 checklist
A short session now saves a long one in January:
- Pull a list of everyone you paid for services this year.
- Flag any contractor at or approaching $2,000.
- Request a W-9 from anyone who does not already have one on file.
- Verify that the names and taxpayer IDs on record are correct.
- Note which payments went through a card or app, since those are excluded.
The payoff
Handled in the fall, 1099 season becomes a formality rather than a scramble. Sort out your contractor records now, and January takes care of itself.
Get your year-end reporting right
If you would like help identifying which contractors need a 1099, collecting and verifying W-9s, or filing when the time comes, we are glad to help. Contact Stone Accounting Services and we will make sure your year-end reporting is clean and on time.
This post is provided for general educational purposes and does not constitute specific tax advice. Every business is different, and we welcome the opportunity to discuss yours.
