1099-K vs 1099-NEC: which form you'll get and why

This post is part of our taxes and expenses hub. The 1099 contractor invoicing guide covers the billing routine. Here we go one level deeper: which information return covers which payment, why you'll sometimes get one, both or neither, and how to make your Schedule C agree with every form in your mailbox.

Which form covers which payment?

The split exists so the IRS doesn't count the same payment twice. The Form 1099-NEC instructions tell payers not to include payments made by credit card or through a third-party payment network, because those are reported on Form 1099-K by the company that moved the money. So if a client pays one invoice by ACH and the next one by card on your invoice link, only the ACH payment belongs on their 1099-NEC.

What changed for 2026

• 1099-NEC: Public Law 119-21, signed July 4, 2025, raised the threshold from $600 to $2,000 for payments made after December 31, 2025. The IRS says it may be adjusted for inflation starting in 2027.
• 1099-K: the same law brought back the old test (more than $20,000 and more than 200 transactions) for third-party settlement organizations, retroactively. The schedule that would have dropped the threshold to $600 for 2026 no longer applies.
• Card payments: the IRS FAQ says there is no minimum for payments received through a payment card transaction. In practice, check what your processor does. Stripe's support page says it files a 1099-K for 2025 and 2026 when an account passes $20,000 and 200 transactions, with lower thresholds in some states.

Worked example: one client, two payment methods

If Dana had passed 200 card payments too, the 1099-K would show the gross card total, fees included. She'd still report the money once, as gross receipts, and deduct the fees separately. The two forms add up to her income; they don't stack on top of each other.

How to reconcile your 1099s with your records

1. Total what clients actually paid you between January 1 and December 31, by payment date. A freelancer on the cash method counts money when it arrives, not when the invoice went out.
2. Split that total by payment method: card or payment app on one side, check, ACH and wire on the other.
3. Match each 1099-NEC to the non-card payments from that client. A client's NEC that's higher than your ACH and check total probably includes card payments by mistake.
4. Match each 1099-K to the gross card or app total for that processor. A 1099-K also shows a month-by-month breakdown, which makes timing differences easy to spot.
5. Ask for a corrected form when a client or processor got it wrong. Keep the email; it explains the difference if the IRS ever asks.
6. Report gross receipts once on Schedule C line 1, put refunds you gave on line 2 (returns and allowances), and deduct processing fees as an expense.
7. Save the worksheet with the year's tax records.

TAX YEAR: 2026

A. Gross receipts from my invoices, paid Jan 1 to Dec 31 ........ $______
   A1. Paid by card or payment app ................................ $______
   A2. Paid by check, ACH, wire or cash ........................... $______

B. Forms 1099-NEC received
   Client                 Form amount    My non-card total    Difference
   ____________________   $________      $________            $________
   ____________________   $________      $________            $________

C. Forms 1099-K received
   Processor              Form gross     My gross card total  Difference
   ____________________   $________      $________            $________

D. Explaining differences
   Payment sent Dec 31, received in January ....................... $______
   Refunds and chargebacks (included in 1099-K gross) .............. $______
   Processing fees (included in 1099-K gross, deducted separately) $______
   Card payments wrongly included on a 1099-NEC (asked for correction) $______

E. Schedule C line 1 (gross receipts) = A ......................... $______

Why the numbers rarely match exactly

• Timing: a client mails a check on December 30 and it reaches you in January. They count it in 2026; you may count it in 2027. A check you received in December counts in December even if you deposit it in January.
• Fees: the 1099-K gross includes the processor's fees. Your bank deposit doesn't.
• Refunds: the 1099-K doesn't subtract refunds or chargebacks either.
• Personal money: friends paying you back through the same app account can show up next to business payments. A separate business bank account and a business-only payment account keep them apart.

Income with no form at all

Many freelancers get fewer 1099s for 2026 than before, because clients under $2,000 no longer have to file. That changes the paperwork, not the tax. All self-employment income goes on Schedule C, and self-employment tax applies once your net earnings reach $400. The quarterly estimated taxes guide shows how to pay as you go, and how much to set aside for taxes puts a percentage on it. If clients ask you for a W-9 before paying, our W-9 guide explains each line.

Doing this in SoloWOS

In SoloWOS you can send invoices clients pay by card through your own Stripe account; a card payment marks the invoice Paid on its own, and for a check or ACH you mark it paid with the date it arrived. Paid invoices feed the Expenses > Reports page, which shows income by month (before any tax you charged), next to expenses and profit. Those monthly totals are what you compare with the month boxes on a 1099-K. SoloWOS doesn't file or read 1099s for you. All 13 tools come with Solo for $15/month.

This post is general information about federal reporting rules for 2026, not tax advice. State rules differ; if a form looks wrong, ask the issuer for a correction and check with a tax professional.