Understanding 1099s: Who Gets One and What You Need to File

If you work with independent contractors, freelancers, or vendors, understanding your 1099 filing responsibilities is crucial to stay compliant with IRS regulations and avoid penalties. This article breaks down who should receive a 1099 and what you need to know to file correctly.

What is a 1099?

A 1099-MISC or 1099-NEC form reports payments made to non-employees during the tax year. These forms help the IRS track income paid outside of regular employee wages.

Who Should Receive a 1099?

Generally, you must issue a 1099-NEC form to any non-employee you’ve paid $600 or more during the year for services. This includes:

• Independent contractors

• Freelancers

• Consultants

• Vendors who are not corporations (some exceptions apply)

Who Does NOT Get a 1099?

• Employees (who get a W-2)

• Corporations (except some legal and medical providers)

• Payments for merchandise, utilities, or rent typically don’t require a 1099

Key Steps to Stay Compliant

1. Collect W-9 Forms Upfront
   Before paying contractors, collect a completed W-9 form to have their taxpayer information on file.

2. Track Payments Carefully
   Maintain accurate records of all payments to contractors throughout the year.

3. File and Distribute 1099s on Time
   The IRS deadline for filing 1099s with the IRS and providing copies to recipients is typically January 31.

Common Mistakes to Avoid

• Forgetting to issue 1099s to qualifying contractors

• Misclassifying workers as contractors instead of employees

• Missing the filing deadline, which can result in penalties

Free Resource: Guide to 1099s

Our Guide to 1099s covers everything from collecting W-9s to filing deadlines and common pitfalls. Download it now to make sure you stay compliant and avoid unnecessary fines.

Getting your 1099s right keeps your business compliant and your contractors happy. It’s a simple but critical part of your year-end bookkeeping process.