If you pay $2,000 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 at least $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)
- Frequently asked questions
- What If You’re Behind on 1099s?
- Book a Free Consultation
Who Needs to File a 1099
The rule is simple: if you pay $2,000 or more in 2026 (it was $600 for 2025 and earlier years) 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 $2,000 threshold is per person, not per invoice. One contractor with 20 invoices of $100 each = $2,000 = 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 | Recipient copy: Feb 1, 2027 (Feb 16 if box 8 or 10 is used). To the IRS: Mar 1, 2027 on paper (Feb 28 is a Sunday), or Mar 31, 2027 online | Rent, royalties, prizes, other income |
| 1099-INT/DIV | Recipient copy: Feb 1, 2027. To the IRS: Mar 1, 2027 on paper (Feb 28 is a Sunday), or Mar 31, 2027 online | 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.
If you e-file, the system is changing too. The IRS is retiring FIRE, and IRIS becomes the only e-file system for information returns after January 1, 2027. Here is what to do about it: IRS FIRE is retiring: move your 1099 filing to IRIS.
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 | At least $680 | $8,160 or more (no cap) |
These penalties are per form, not per filing. 12 late 1099s = 12 × the penalty. The amounts are the IRS figures for returns due in 2026, the latest it has published here. The IRS adjusts them for inflation each year, so check its information return penalties page before you file.
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. Picture an agency with 12 contractors that misses the deadline entirely. The late filing penalty applies to each form, so a dozen late forms can reach into the thousands of dollars 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 $2,000 or more. 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 IRIS portal, or software that files through IRIS. The old FIRE system closes on Nov 19, 2026. E-filing is required if you file 10 or more information returns
- 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. If payroll is on your list too, our year end payroll checklist covers W-2s, final deposits and the rest.
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 the 1099s you file for at least 3 years from the due date, or 4 years if you withheld any federal tax. Keep the W-9s and payment records with them.
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 |
Frequently asked questions
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 $2,000? 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 to 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)
- $2,000 threshold per contractor for 2026 payments, track all payments, not just invoices
- Collect W-9s before first payment, not in December when you’re scrambling
- Penalties: $60 to $340 per form depending on lateness, $680 or more for intentional disregard
- No extension available for 1099-NEC
- Start in December. January is too late for gathering information
Want proof from real files? See the 5 QuickBooks setup errors we see most.
Sources
Checked against official sources on October 13 and October 19, 2026: IRS: Information return penalties and IRS Publication 1099, General Instructions for Certain Information Returns.
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- How to Clean Up a Bookkeeping Backlog: The Complete Step-by-Step Guide
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- 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.
