Table of Contents

1099 Forms

How and When to Send a 1099 to Contractors: 2026 Rules

Updated: September 21, 2026
Tags: 1099 Forms

Key Takeaways

  • File Form 1099-NEC when qualifying payments to a contractor reach $2,000 in 2026.
  • Report business payments for nonemployee services on Form 1099-NEC. Employee wages go on Form W-2, while personal payments generally are not reported on Form 1099-NEC.
  • Send the contractor copy and file with the IRS by February 1, 2027. These are separate steps, even though they have the same deadline.
  • Contractor copies can be sent on paper or electronically. Electronic delivery requires the contractor’s consent and must follow the applicable access and notice rules.

Need to send a 1099 to a contractor? You may need to file Form 1099-NEC, depending on the type and amount of the payment. Let’s discover what you need to know before you send Form 1099 to contractors.

Who Must Send a 1099-NEC to a Contractor?

To determine whether Form 1099-NEC reporting is applicable, check:

  • If the payment was made in the course of a trade/business, including qualifying nonprofit and government activities
  • If the recipient performed services as a nonemployee

(Employees generally receive Form W-2 instead)

  • If the contractor is a U.S. person
  • If the payments reached the applicable reporting threshold

Personal Payments Do Not Trigger Form 1099-NEC

The Form 1099-NEC rules apply to payments made for trade or business. A payment for services performed for a purely personal purpose generally does not create a Form 1099-NEC reporting requirement.

Example: Paying a contractor to repair your business office can be reportable. Paying the same contractor to repair your personal residence generally is not a business payment for Form 1099-NEC purposes.

OBBBA Changed the Contractor 1099 Threshold for 2026

The One Big Beautiful Bill Act (OBBBA), enacted as Public Law 119-21, changed the Form 1099 contractor compensation threshold for 2026. The revised OBBBA Form 1099 contractor rules are as follows:

Payment Year Filing Season Federal NEC Threshold
2025 2026 $600
2026 2027 $2,000

What Changed Under Public Law 119-21?

The changes under Public Law 119-21 are summarized below:

  • Threshold

The threshold for reporting qualifying nonemployee compensation has increased from $600 to $2,000 for payments made during the calendar year after December 31, 2025.

(The $2,000 threshold may increase after 2026 based on inflation adjustments.)

  • Transactions Covered

The new threshold applies only to reportable service payments to nonemployees under IRC Sections 6041 and 6041A.

  • Payer Action
  • Monitor payments made to each contractor during the calendar year
  • Issue Form 1099-NEC only when the total qualifying payments to a contractor reach $2,000 or more

The $2,000 Rule Does Not Apply to Every 1099 Payment

The $2,000 rule does not apply to every Form 1099 payment. For example, Form 1099-B reports barter exchange transactions for all amounts. The $2,000 amount is specific to nonemployee compensation in Box 1 of Form 1099-NEC.

Collect Form W-9 Before Preparing the Contractor’s 1099

Request Form W-9 From the Contractor

Payers should request Form W-9 from each U.S. contractor to obtain the TIN and other information needed for reporting. It provides the following information requisite to complete Form 1099-NEC:

  • Legal name as appearing on their tax return;
  • Business name, if different than the above name;
  • Federal tax classification;
  • Address;
  • TIN, and
  • Whether they are an exempt payee.

Missing TINs and Backup Withholding

Note: If backup withholding applies, such as when a contractor fails to furnish a TIN or the IRS notifies you to impose backup withholding for an incorrect TIN, withhold 24% and file Form 1099-NEC regardless of the payment amount.

Example

Suppose in 2026, a consulting firm owes a designer $2,500 for services.

However, backup withholding applies, so the firm has to withhold 24% which amounts to $600 and pay the designer the remaining $1,900.

The firm needs to report the entire amount, i.e., $2,500, in Box 1a and the amount withheld, i.e., $600, in Box 4 of Form 1099-NEC.

Prepare Form 1099-NEC Before Sending It to the Contractor

Enter the Correct Payer and Recipient Information

When reporting is required, prepare the contractor’s Form 1099-NEC using the payer and recipient information collected from the W-9.

Important boxes to be filled are:

Box Enter
Box 1a — Nonemployee Compensation Nonemployee compensation of $2,000 or more, including fees, commissions, prizes, and awards for services and other compensation for services performed during the tax year
Note: Do not automatically exclude parts, materials, or nonemployee reimbursements; their reporting treatment depends on the applicable IRS rules
Box 4 — Federal Income Tax Withheld Federal income tax withheld under the backup-withholding rules, when applicable

Which 1099 Copy Should Payers Send to Contractors?

Furnish Copy B or an Acceptable Substitute Statement

The contractor receives Copy B of Form 1099-NEC, or an acceptable substitute recipient statement containing the following information on clear display:

  • Payer and recipient information
  • Tax year
  • Form name and number
  • Nonemployee compensation
  • Federal income tax withheld, when applicable
  • Required recipient instructions

How Can Payers Send Form 1099-NEC to Contractors?

Payers have multiple options for furnishing the contractor’s Form 1099-NEC copy:

Delivery method Permitted What Is Required
In-person delivery Yes Give the statement directly to the contractor
By paper mail Yes Provide the statement before the deadline to the contractor’s mailing address
By a secure website/portal Yes The contractor must consent to electronic delivery, and the website should satisfy the IRS’s requirements
Email with secure access link Yes The contractor should provide electronic consent and access the statement through the secure website
PDF as an email attachment No, not by itself The attachment should comply with the IRS’s consent, access, and notification requirements

When Must Payers Send Form 1099-NEC to Contractors?

For payments made during 2026, the federal deadline is as follows:

Event Contractor’s Form 1099 Deadline for 2027
Furnish Form 1099-NEC to the contractor February 1, 2027 (Since January 31 falls on Sunday)
File Form 1099-NEC with IRS February 1, 2027 (Since January 31 falls on Sunday)

How to Send Form 1099-NEC by Mail?

Follow the steps below:

Step Action What To Do?
Verification of the Mailing Address Use the address from Form W-9 and any updated information provided by the contractor.
Preparation of the Recipient Copy Furnish Copy B or an acceptable substitute statement that is legible and contains all required fields.
Delivery of the Statement The Statements for the year 2026 Form 1099-NEC should be deposited in the U.S. mail system no later than Monday, February 1, 2027.
Retention of Distribution Records Retain proof of postage, delivery logs, addresses of recipients, and duplicate files for a period of at least 3 years from the due date and 4 years if federal withholding was imposed

Can Payers Email a 1099 to a Contractor?

Yes, Form 1099-NEC can be provided electronically. However, the contractor must first give affirmative electronic consent indicating that the contractor is able to access the statement in the format provided. The contractor’s email address alone does not constitute consent.

How Electronic Delivery Works

To email the contractor:

  • Make the Form 1099-NEC available through a secure electronic platform once you receive consent
  • Inform the contractor that the statement is available
  • Provide access and printing instructions.
  • Keep the 2026 statement accessible through October 15, 2027.

It’s important to understand that sending only a PDF email attachment, without proper consent records and compliant electronic access, may not meet IRS electronic delivery rules.

Common 1099 Contractor Scenarios for 2026

Case Study Result Form 1099-NEC Applies?
Business pays a freelance designer $1,800 in qualifying nonemployee compensation during 2026 Below the normal federal NEC threshold, no Form 1099-NEC is required solely because of the payment amount No Form 1099-NEC
Business pays an independent consultant $2,500 in qualifying nonemployee compensation during 2026 Reportable nonemployee compensation Form 1099-NEC, Box 1a
Contractor provides an email address, but has not affirmatively consented to electronic statements Do not rely on electronic-only delivery Furnish the recipient statement on paper
A contractor receives $3,000 and has consented to electronic delivery Form 1099-NEC can be furnished electronically through a compliant system Form 1099-NEC, Box 1a / Electronic delivery
Business backup withholds federal income tax from a contractor receiving less than $2,000 Reporting is required regardless of the normal payment threshold Form 1099-NEC, Box 1a and Box 4

FAQs

1. Can I send a contractor their 1099 by email?

Yes, when the contractor has provided valid affirmative electronic consent, and you follow the IRS electronic-furnishing requirements. Simply emailing a PDF does not, by itself, satisfy those requirements.

2. What if a contractor loses their 1099?

Provide another copy of the same accurate statement. If the original information was correct and you are only providing another copy, you generally do not need to file a corrected Form 1099-NEC with the IRS.

3. What happens when a contractor withdraws the consent for the electronic transmission?

When a contractor withdraws their consent for the electronic transmission of Form 1099-NEC, the payer has to use the paper method of delivery for any unreceived form(s).

4. Does sending the 1099 to the contractor also mean filing it with the IRS?

No. Furnishing the recipient statement to the contractor and filing the information return with the IRS are separate responsibilities.

Stay on top of the February 1, 2027, 1099-NEC deadline with a streamlined filing process!

Use Tax1099 to prepare, eFile, and securely deliver Form 1099-NEC recipient copies to contractors.

Prepare and Send Forms 1099-NEC