The start of a new year means one thing for business owners and bookkeepers: 1099 season. Preparing and filing 1099s is a crucial part of staying compliant with the IRS—but it doesn’t have to be overwhelming. With a clear checklist and an understanding of the rules for the 2026 filing season (covering 2025 payments), you can stay ahead of deadlines and avoid costly mistakes.
Here’s what you need to know.
What is a 1099?
A 1099 is an information return the IRS requires businesses to issue when they pay certain types of non-employee compensation or other reportable payments. Think of it as the IRS’s tracking system for income paid outside of payroll.
The most common form is the Form 1099-NEC, which reports payments made to independent contractors and service providers.
Who Must Receive a 1099-NEC for the 2025 Tax Year?
You must file a 1099-NEC for any non-employee if all the following are true:
- You paid them $600 or more during 2025.
- Payments were for services, not goods.
- They are not your employee.
- Payments were made via cash, check, ACH, or other direct means (not through third-party payment processors).
Common examples:
- Freelancers, consultants, and contractors
- Bookkeepers and accountants (not employed by you)
- Repair and maintenance professionals
- Web designers and developers
- Marketing or social media contractors
Payments that do not require a 1099-NEC:
- Payments to C-corporations and S-corporations (except attorneys)
- W-2 employees
- Payments processed by credit card, debit card, PayPal, Venmo Business, Stripe, Square, etc. — these are reported on a 1099-K by the payment processor
What About Form 1099-MISC?
You’ll still use Form 1099-MISC to report certain non-service payments, including:
- Rent payments
- Royalties
- Prizes or awards
- Medical or healthcare payments
- Attorney settlement amounts (not attorney fees — those go on NEC)
For many businesses, both forms may be needed.
Important Deadlines for the 2026 Filing Season
These deadlines apply to forms reporting payments made in 2025:
January 31, 2026
- Form 1099-NEC: Due to contractors
- Form 1099-NEC: Due to the IRS (e-file or paper — same date)
- Form 1099-MISC: Due to recipients
February 28, 2026
- Paper filing deadline for Form 1099-MISC to the IRS
March 31, 2026
- E-file deadline for Form 1099-MISC
Reminder: Most businesses must now e-file information returns if they issue 10 or more combined forms (W-2s + 1099s + other information returns).
Information You Need to Gather
Before filing, make sure you have:
- A completed W-9 from each contractor
- Contractor’s legal name
- Business name (if applicable)
- Address
- Taxpayer Identification Number (TIN or EIN)
- Total amount paid in 2025
Common 1099 Errors to Avoid
Businesses often make these mistakes:
- Sending a 1099 to a corporation by accident
- Forgetting to issue 1099s for rent payments
- Sending a 1099-NEC for product purchases
- Not reconciling contractor payments until the last minute
- Filing late — which can lead to penalties starting at $60 per form
Updates & Reminders for the 2026 Filing Season
While there are no major structural changes, here are notable points for 2026:
- E-file requirements remain strict — most businesses must submit all forms electronically.
- 1099-K enforcement is increasing, which means more contractors may expect forms from payment processors.
- The IRS continues to focus on worker classification, making accurate 1099 reporting more important than ever.
- Accurate TIN matching helps avoid automatic IRS “B-Notices” and penalties.
Tips to Make 1099 Season Easier
To reduce stress:
- Collect W-9s before paying a contractor
- Maintain accurate vendor records throughout the year
- Map your accounts properly in QBO, Xero, or your accounting software
- Reconcile vendor totals before December ends
- File electronically for fewer errors and faster processing
Working ahead—and working with an accountant—can save a ton of time in January.
Final Thoughts
1099 compliance is a key piece of year-end bookkeeping, but with the right preparation, it doesn’t have to be a headache. By staying organized and understanding the 2026 filing requirements for the 2025 tax year, your business can remain compliant, avoid IRS notices, and start the new year smoothly.
If you need help reviewing contractor payments, preparing 1099s, or ensuring your vendor list is complete, our team is ready to help make 1099 season stress-free. Book a Discovery Call today to get started!
