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Who Must File 1099 Forms in 2026: Guide for U.S. Payers

1099 forms are information returns that inform or report to the Internal Revenue Service (IRS) payments made in the course of a trade or business. This also includes income earned outside regular employment.
There are several versions of 1099 forms; each introduced to track a different type of payment. In this blog, we’ll take a look at what is 1099, who must file 1099 forms, its reporting requirements, and more.

The Universal Rule of “Trade or Business”

The Universal Rule of “Trade or Business” states that only the amount paid in the course of trade or business is considered a qualifying payment and is to be reported on 1099 forms. It excludes personal or non-business payments.

Most1099 forms have a minimum threshold of $600. Though the threshold varies depending on the form or payment type. For example, royalties (reported on 1099-MISC), interest reporting (reported on 1099-INT) both have a $10 trigger.

Furthermore, if a payee refuses to provide a W9 form or provides an incorrect TIN, then you must hold 24% of the amount and report same in the 1099 form.

Who Files 1099 Forms and Who Doesn’t?

The following businesses are required to issue 1099 forms if they made payments in the course of a trade or a business:

  • Partnerships
  • Sole proprietor
  • LLCs
  • Trusts/estates
  • Nonprofits organizations
  • Corporations (C-corporations & S-corporations).
  • State, Federal, and local agencies

Exclusions:

  • Personal (non-business) payments
  • Payments to corporations (with a few exceptions)

Common 1099 Forms and Trigger Limits

Form Reports Minimum Reporting Threshold/Triggers
1099-NEC 1099NEC payer rules require reporting of Non-employee compensation and services $600+
1099-INT Reports interest income from financial institutions and banks $10+
1099-MISC Reports miscellaneous payments: rents, medical fees, royalties, attorney fees, prizes, etc.
  • $10+ for royalties
  • $600+ for other payments
1099-DIV Report investment distributions and dividend pay-outs $10+ (or $600+ for certain liquidation distributions)
1099-S Report proceeds from real estate transactions No minimum limit
1099-R Report Pension or retirement pay-outs $10+
1099-B Report Barter or broker trades No minimum limit
1099-K Report third-party payment card network sales $2,500+

Edge and Misconceptions Cases

Here are some of the common misconceptions and edge cases regarding reporting 1099s:

  • S-corps cannot receive1099s: S-corps must receiveappropriate 1099 forms for payments to attorneys and for medical/health-care payments.
  • $500 paid in rent: Rental payments of $600 or more must be reported in 1099-MISC. If the rent payment is lower than $600, a 1099 is not required unless backup withholding applies have due to invalid or incorrect TIN.
  • Legal Settlements: All legal settlements, including payment for attorney services, attorney gross proceeds, and damages paid to a claimant, have to be reported on 1099 forms if they are more than $600..
  • Foreign Contractors: For foreign contractors, if their service was done outside the U.S., then 1099s are not required.
  • Sales through the Digital platforms: Any payments made through a third-party digital platform are reported by that platform on a 1099-K form..

Penalties for late 1099 filing or missed forms

Period of Delay Penalty per Form Max Limit
If filed within a period of 30 days from the due date $60 per form $232,500 for small businesses
$664,500 for large businesses
If filed after 30 days from the due date but before August 1 $120 per form $664,500 for small businesses
$1,993,500 for large businesses
If filed after August 1 or not at all $330 per form $1,329,000 for small businesses
$3,987,000 for large businesses
If the IRS finds that the taxpayer has intentionally disregarded the form $660 per form No max limit

1099 Compliance Checklist

Here is the simple 1099 reporting compliance checklist to ensure beforehand:

  1. Collect FormW9 from the recipientand ensure you get the correct TIN before making the first payment.
  2. Verify the vendor’s TIN using the Tax1099’s real-time TIN Match to check TIN/Name with IRS records.
  3. Keep track of the payments made throughout the year and aggregate to see if the amount crosses the minimum reporting threshold
  4. E-file andsubmit the form to the IRS and mail copies to recipients before the deadlines.

Real Life Examples of 1099 Reporting

Scenario Box/Code & Form
$1000 payment made to a web developer Box 1 of Form 1099-NEC
$700 office rental payment Box 1 of Form 1099-MISC
$20,000 distributed from a 401(k) Code 7 (distribution code) in Box 7 of Form 1099-R
Paid a contest winner $350 as prize money Box 3 of Form 1099-MISC
$1800 in attorney settlement proceeds Box 10 of Form 1099-MISC
$20 interest from a bank credit Box 1 of Form 1099-INT
Sale of items on Etsy Form 1099 is not filed at your end. Payment platform issues the Form 1099-K

FAQs

1. Do the corporations get 1099s?

Corporations usually do not receive 1099s except for legal or medical service payments (reported on 1099-MISC).

2. Is postage reimbursement reportable?

Postage reimbursement is not reportable if they are made with proper documentation under an accountable plan.

3. What will happen if the payee does not give TIN?

The payer can withhold 24% of theamount if the payee does not give their TIN.

4. Can one vendor receive several form 1099s?

Yes, a singlevendor can receive several 1099s for several payments, such as Form 1099-MISC for medical services and Form 1099-NEC for services by a non-employee.

5. Is Form 1099 mandatory for foreign work performed abroad?

For foreign work abroad or outside the U.S., Form 1099 is not required. If services were in the U.S., they will receive Form 1042-S.

6. Do donations or gifts reported in 1099s?

No, only payments related to trade or a business are reported in 1099 forms.

7. Is Zelle or Venmo exempt?

Payments made from a Zelle or Venmo are not exempt. They are reported on Form 1099-K by the payment processor itself.