Quick answer: If you pay $600 or more to any contractor in 2026, you must file Form 1099-NEC by January 31, 2027. Since January 31, 2027 falls on a Sunday, the deadline shifts to Monday, February 1, 2027. Miss it and IRS penalties start at $60 per form (30 days late) and climb to $340 per form if you don’t file at all. Intentional disregard costs $680 per form with no maximum cap.
In this guide:
- Who Needs to File a 1099
- What Information You Need Before You Start
- The 2027 Filing Deadlines
- IRS Penalties: The Real Cost of Being Late
- How to File: Step-by-Step
- Common 1099 Mistakes (And How to Avoid Them)
- People Also Ask
- What If You’re Behind on 1099s?
- Book a Free Consultation
Who Needs to File a 1099
The rule is simple: if you pay $600 or more in a calendar year to any non-employee for services, you must file Form 1099-NEC.
This includes:
- Freelancers and independent contractors
- Lawyers and legal services (even if incorporated)
- Consultants and advisors
- Cleaning services, maintenance, repairs
- Marketing agencies and designers
- Bookkeepers and accountants you hired externally
This does NOT include:
- Employees (you file W-2s for them)
- Corporations (C-Corp or S-Corp) — with the lawyer exception above
- Payments made by credit card or PayPal (those get reported by the payment processor on Form 1099-K)
- Reimbursements for expenses
The $600 threshold is per person, not per invoice. One contractor with 12 invoices of $50 each = $600 = 1099 required.
What Information You Need Before You Start
You cannot file a 1099 without the contractor’s correct information. The time to collect this is before you pay them, not in January when you’re scrambling to meet the deadline.
What you need:
- Full legal name or business name
- Address
- Taxpayer Identification Number (TIN) — either SSN or EIN
- Total amount paid in the calendar year
How to collect it: Send every new contractor a Form W-9 before their first payment. This is a one-page form they fill out with their legal name, address, and TIN. Keep it on file.
If you don’t have a W-9, you cannot file accurately. And if the IRS audits you and you can’t produce one, you’re in a much worse position than just paying a late penalty.
If your books are already behind on contractor tracking, our 7 Signs Your Books Are Falling Behind post will help you spot the broader warning signs.
The 2027 Filing Deadlines
Table
| Form | Deadline | What It Covers |
|---|---|---|
| 1099-NEC | February 1, 2027 | Non-employee compensation (the big one) |
| 1099-MISC | February 1, 2027 | Rent, royalties, prizes, other income |
| 1099-INT/DIV | February 1, 2027 | Interest and dividends |
| W-2 | February 1, 2027 | Employee wages |
February 1, 2027 is a hard deadline. It’s the same for paper filing and e-filing. There is no automatic extension for 1099-NEC.
January 31, 2027 falls on a Sunday, so the deadline shifts to Monday, February 1, 2027.
IRS Penalties: The Real Cost of Being Late
Per the IRS’s own General Instructions for Certain Information Returns, 2027 penalties are tiered by how late you file:
Table
| Filing Date | Penalty Per Form | Example: 12 Contractors |
|---|---|---|
| On time (by Feb 1) | $0 | $0 |
| Up to 30 days late | $60 | $720 |
| 31 days late – Aug 1 | $130 | $1,560 |
| After Aug 1 or not filed | $340 | $4,080 |
| Intentional disregard | $680 | $8,160 (no cap) |
These penalties are per form, not per filing. 12 late 1099s = 12 × the penalty.
There is no “I didn’t know” exemption. The IRS does not accept ignorance of the requirement as a valid reason for late filing.
State penalties may apply too. Many states have their own 1099 filing requirements with separate penalties. California, for example, requires filing with the Franchise Tax Board in addition to the IRS.
In our audits, missing 1099 deadlines was Mistake #4 — and one of the most expensive per incident. An agency with 12 contractors missed the deadline entirely and paid $4,100+ in penalties alone for paperwork that should have taken one afternoon.
How to File: Step-by-Step
Step 1: Gather Your Records (Do This in December)
Pull every contractor payment from your books. Cross-check against your bank statements to make sure you didn’t miss anyone.
Step 2: Verify W-9s
Make sure you have a completed W-9 for every contractor who received $600+. If you’re missing any, send a request immediately. Contractors are not always quick to respond.
Step 3: Calculate Totals
Sum payments per contractor for the calendar year. Make sure you’re counting gross payments, not net after fees.
Step 4: Choose a Filing Method
- E-file: IRS FIRE system or third-party service (recommended for 10+ forms)
- Paper file: Mail Forms 1096 and 1099 to the IRS (slow, error-prone)
Most bookkeeping firms, including ours, handle 1099 filing as part of year-end prep.
Step 5: Send Copies to Contractors
By February 1, every contractor must receive their Copy B. E-filing services typically handle this automatically.
Step 6: File With the IRS
Submit by February 1, 2027. Keep copies of everything for at least 4 years.
Common 1099 Mistakes (And How to Avoid Them)
Table
| Mistake | Why It Happens | Fix |
|---|---|---|
| Missing a contractor | Paid in cash, through personal account, or via Venmo | Reconcile all accounts monthly |
| Wrong TIN | Contractor gave incorrect SSN or EIN | Verify W-9 before first payment |
| Double-reporting | Paid via credit card AND reported on 1099 | Exclude credit card payments |
| Filing 1099-MISC instead of NEC | Confused about which form applies | NEC = services, MISC = rent/royalties |
| Missing the deadline | “I’ll do it in January” → January gets busy | Start in December, file by mid-January |
People Also Ask
Do I need to file 1099s for payments made through PayPal or credit card? No. Payments made through payment cards or third-party networks (PayPal, Stripe, Square) are reported by the payment processor on Form 1099-K. You do not issue a 1099-NEC for those amounts.
What if I paid a contractor less than $600? No 1099 required. But you should still track the payment for your own records and potential deduction claims.
Can I file 1099s myself, or do I need an accountant? You can file yourself using IRS e-file or paper forms. However, if you have more than 5–10 contractors, the time and error risk usually make it worth outsourcing to a bookkeeper or CPA.
What happens if a contractor won’t give me a W-9? You can still file the 1099 without a TIN, but mark it as “Refused” or “Not Provided.” The contractor may face their own penalties, but you’re still responsible for filing.
Is there an extension for 1099 deadlines? No. Unlike business tax returns, there is no automatic extension for 1099-NEC. The February 1 deadline is fixed.
What if I discover I missed a 1099 after filing? File a corrected 1099 as soon as possible. Penalties are based on when you file, so earlier is always better.
What If You’re Behind on 1099s?
If you’re reading this and realizing you missed the 2026 deadline, or your contractor tracking is a mess, here’s what to do:
- Gather what you can. Pull bank statements, check registers, and payment apps.
- Send W-9s immediately. Even if late, having the correct information matters.
- File as soon as possible. Penalties are calculated from the filing date, so every day matters.
- Set up a system for next year. Collect W-9s before first payment. Reconcile monthly.
If your books are too far behind to even identify who needs a 1099, our bookkeeping backlog cleanup guide walks through exactly how we untangle this kind of situation.
Key Takeaways
- 1099-NEC deadline: February 1, 2027 (January 31 is Sunday)
- $600 threshold per contractor — track all payments, not just invoices
- Collect W-9s before first payment — not in December when you’re scrambling
- Penalties: $60–$340 per form depending on lateness, $680 for intentional disregard
- No extension available for 1099-NEC
- Start in December — January is too late for gathering information
Related From Senvora
- 7 Bookkeeping Mistakes That Cost Small Businesses $50,000+
- 7 Signs Your Books Are Falling Behind (Free Self-Assessment)
- How Much Does Outsourced Bookkeeping Cost in 2026?
- How to Clean Up a Bookkeeping Backlog: The Complete Step-by-Step Guide
- Small Business Month-End Close Checklist: The Complete Guide
- Free Bookkeeping Backlog Cost Calculator
Aryan Patel is the founder of Senvora Group, a QuickBooks ProAdvisor certified bookkeeper with direct experience in month-end close, reconciliations, and financial statement preparation across e-commerce, real estate, professional services, and DTC brands. Connect on LinkedIn.
