Filing Form 1099-NEC when you hire subcontractors

This post is part of our taxes and expenses hub. The 1099-K vs 1099-NEC post covers the forms you receive; this one is about the other side, when you pay another freelancer to help on a project. IRS rules below were checked on October 23, 2026 for payments made in calendar year 2026.

Do you need to send a 1099-NEC?

The $2,000 is per payee for the calendar year, added up across all their invoices. For payments made through 2025 the threshold was $600, so if you hired help in 2025 you may remember filing for smaller amounts. The same $2,000 now applies to backup withholding.

One question comes before the form: is this person really a contractor? The IRS looks at behavioral control, financial control and the relationship between you. Someone you direct day to day, on your schedule and with your tools, may be an employee, which brings payroll rules instead of a 1099. The IRS page on independent contractor or employee explains the test, and an independent contractor agreement should match how the work actually happens.

Step by step for 2026 payments

1. Before the first payment, ask for a Form W-9. It gives you the contractor's legal name, business name, tax classification and taxpayer ID (SSN or EIN). The W-9 guide explains each line from the other side.
2. Check the tax classification box. Individual/sole proprietor or a single-member LLC means you'll file if you reach $2,000. C or S corporation generally means you won't.
3. If they won't give you a TIN, you may have to withhold 24% of reportable payments and send it to the IRS as backup withholding. Most contractors hand over the W-9 once they hear that.
4. Track every payment by date, amount and method. Card and payment-app payments go in a separate column, since they stay off the 1099-NEC.
5. In January 2027, total each contractor's non-card payments for 2026. Anyone at $2,000 or more gets a 1099-NEC, with the amount in box 1.
6. File with the IRS and send the contractor their copy by Monday, February 1, 2027. You can file for free through the IRS Information Returns Intake System (IRIS); it needs a Transmitter Control Code (TCC), and applying for one takes an EIN, so start early. If you file 10 or more information returns in total for the year, you must file electronically; on paper, you'd need the official scannable Copy A and Form 1096.
7. Check your state. Some states want their own copy of the 1099-NEC, and the Combined Federal/State Filing program doesn't cover every state or every case.
8. Keep the W-9, the payment records and a copy of each 1099 with your tax records.

Common mistakes

• Using the old $600 threshold for 2026 payments. Some older IRS pages and many third-party articles still show $600; it applies only to payments made through 2025.
• Including card and payment-app payments. The IRS instructions keep them off the 1099-NEC, so the same money isn't reported on your form and again on a processor's 1099-K.
• Asking for the W-9 in January. Contractors move, change names or stop answering; collect it before you pay.
• Thinking no 1099 means no deduction. The deduction for contract labor depends on the payment being a business expense you can document, not on whether a form was filed.

Where SoloWOS fits

SoloWOS doesn't file or issue 1099s. What it can do is keep the payment record: log business expenses with receipts under the Contractors category as you pay each subcontractor, note the payment method, and export the year to CSV in January to total each contractor before you file. The Schedule C expense categories post shows where those payments go on your return.

This is general information about federal 1099 rules for payments made in 2026, not tax advice. State rules differ. Check with a CPA or enrolled agent, especially about worker classification.