\n| 2027 and later<\/td>\n | $2,000, subject to inflation adjustment<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n OBBBA also moves most 1099-MISC payments to $2,000. Exceptions include royalties ($10), substitute payments in lieu of dividends or tax-exempt interest ($10), and gross proceeds paid to an attorney ($600).<\/p>\n Which Construction Subcontractors May Need Form 1099-NEC?<\/h2>\nCommon payees that may need a construction subcontractor 1099 include:<\/p>\n \n- Electricians, plumbers, carpenters, roofers, and painters<\/li>\n
- HVAC contractors<\/li>\n
- Concrete, masonry, and excavation subcontractors<\/li>\n
- Independent equipment operators<\/li>\n
- Construction consultants and freelance estimators<\/li>\n
- Architects and engineers providing independent services<\/li>\n
- Attorneys providing legal services<\/li>\n<\/ul>\n
Entity type still matters. Incorporated architects and engineers may be exempt, while attorneys are not.<\/p>\n Also, calling someone a \u201csubcontractor\u201d in a contract does not automatically make them an independent contractor. The actual working relationship determines the classification. If the worker is legally an employee, their payments should be reported on Form W-2.<\/p>\n Which Subcontractor Payments Require a 1099?<\/h2>\nThe table below applies the federal rules on 1099 for construction contractors to common 2026 payments.<\/p>\n \n\n\nGeneral Contractor Payment<\/strong><\/th>\nGeneral Federal Treatment<\/strong><\/th>\n<\/tr>\n\n| $12,000 paid by ACH to a self-employed plumber<\/td>\n | Form 1099-NEC<\/td>\n<\/tr>\n | \n| $1,500 paid to a carpenter in 2026<\/td>\n | No Form 1099-NEC required (below the $2,000 threshold)<\/td>\n<\/tr>\n | \n| $8,000 paid to an electrical subcontractor operating as a partnership<\/td>\n | Form 1099-NEC<\/td>\n<\/tr>\n | \n| $6,000 ordinary service payment to a qualifying S corporation<\/td>\n | Generally exempt<\/td>\n<\/tr>\n | \n| $5,000 to an incorporated law firm for legal services<\/td>\n | Form 1099-NEC<\/td>\n<\/tr>\n | \n| $7,000 subcontractor bill paid by business credit card<\/td>\n | No Form 1099-NEC the payment processor files Form 1099-K<\/td>\n<\/tr>\n | \n| Purchase solely of construction materials<\/td>\n | Not Form 1099-NEC<\/td>\n<\/tr>\n | \n| Wages paid to a construction employee<\/td>\n | Form W-2<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Payments to corporations are generally exempt, but legal fees remain reportable even when the law firm is incorporated.<\/p>\n An LLC is not automatically exempt its treatment depends on the federal tax classification shown on its Form W-9.<\/p>\n Do General Contractors Issue 1099s for Credit Card Payments?<\/h2>\nNot for the card-settled portion. Card payments are reported on Form 1099-K by the payment settlement entity, so the contractor should not duplicate them on Form 1099-NEC.<\/p>\n Split-Payments<\/h3>\nLet\u2019s understand what to do about split payments with an example. In 2026, a roofing subcontractor gets $4,000 by ACH and $3,500 via business credit card.<\/p>\n Only the $4,000 paid by ACH counts toward Form 1099-NEC reporting because card payments are reported on Form 1099-K. Since the ACH payments exceed $2,000, the contractor reports $4,000 in Box 1a, not $7,500.<\/p>\n Are Materials Included on a Subcontractor’s 1099?<\/h2>\nUnder IRS instructions, nonemployee compensation includes parts or materials used to perform a service when supplying them is incidental to the service. Listing materials as a separate line item does not make an invoice partly exempt.<\/p>\n Scenario: Service Contract<\/h3>\nA roofing subcontractor charges $9,000 for labor and $5,000 for supplies. The general contractor often reports the entire $14,000 in Box 1a since the materials are provided as part of the roofing job.<\/p>\n Scenario: Merchandise-Only<\/h3>\nBuying $5,000 of lumber from a building-supply vendor, with no installation services, is a merchandise purchase and not reportable on Form 1099-NEC.<\/p>\n Why Should General Contractors Collect Form W-9 From Subcontractors?<\/h2>\nInstead of collecting Form W-9 during filing season, do so during subcontractor onboarding, prior to the first payment.<\/p>\n It collects:<\/p>\n \n- Legal name and business or DBA name<\/li>\n
- Address<\/li>\n
- SSN or EIN<\/li>\n
- Federal tax classification, including LLC tax classification when applicable<\/li>\n<\/ul>\n
Accurate W-9 data reduces name and TIN mismatches when preparing 1099-NEC for subcontractors.<\/p>\n What Happens If a Subcontractor Does Not Provide a Valid TIN?<\/h3>\nIf a subcontractor does not provide a valid taxpayer identification number (TIN), the contractor may have to apply 24% backup withholding to certain payments.<\/p>\n In this situation, the contractor must report the backup withholding on Form 1099-NEC, including the withheld amount in Box 4. Backup withholding can also apply when the IRS notifies the payer that a TIN is incorrect.<\/p>\n When Do General Contractors Need to Send and File Form 1099-NEC?<\/h2>\nFor 2026 payments filed in 2027:<\/p>\n \n\n\nRequirement<\/strong><\/th>\nDeadline<\/strong><\/th>\n<\/tr>\n\n| Furnish Form 1099-NEC to the subcontractor<\/td>\n | February 1, 2027<\/td>\n<\/tr>\n | \n| File Form 1099-NEC with the IRS<\/td>\n | February 1, 2027<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n January 31, 2027, falls on a Sunday, so the deadline moves to the next business day.<\/p>\n When Is Electronic Filing Required?<\/h3>\n10-Return Rule: A contractor filing 10 or more information returns in aggregate, counting all types such as 1099s and W-2s, must file electronically.<\/p>\n For tax year 2026, Forms 1099-NEC filed electronically must go through IRIS. The IRS is retiring FIRE, which will not accept submissions in the 2027 filing season.<\/p>\n Do General Contractors Have Separate State 1099 Filing Requirements?<\/h2>\nPossibly. Not every state’s reporting requirements are satisfied by complying with federal contractor 1099 regulations. State regulations may vary in:<\/p>\n \n- Reporting thresholds<\/li>\n
- State income tax withholding<\/li>\n
- Direct state filing obligations<\/li>\n
- Electronic filing requirements<\/li>\n
- Filing deadlines<\/li>\n<\/ul>\n
Examine each applicable state’s regulations after confirming the federal general contractor 1099 requirements.<\/p>\n Frequently Asked Questions About 1099s for Subcontractors<\/h2>\n1. Do I need to send a 1099 if I hire the same subcontractor for multiple jobs?<\/h5>\nYes. Add up the payments made to the subcontractor for all jobs during 2026. If the total reaches $2,000 or more, file and furnish Form 1099-NEC by the deadline.<\/p>\n 2. Do I need a separate 1099 for each construction project?<\/h5>\nGenerally, no. A 1099 for subcontractors is based on total payments to each payee for the calendar year, not on individual projects.<\/p>\n 3. What if I paid the same subcontractor from more than one business?<\/h5>\nPayments are not combined across separate legal payers. Each business that is a separate legal payer should review its own payments and reporting obligations independently.<\/p>\n 4. Do I need to send a copy of Form 1099-NEC to the subcontractor?<\/h5>\nYes. The contractor must furnish a copy to the subcontractor by February 1, 2027, for 2026 payments.<\/p>\n 5. Can I send Form 1099-NEC to a subcontractor before the deadline?<\/h5>\nYes, once the year’s payment information is complete and accurate.<\/p>\n 6. What if I discover an error after sending Form 1099-NEC?<\/h5>\nFile a corrected Form 1099-NEC with the IRS and furnish a corrected copy to the subcontractor.
\nElectronically filed originals must be corrected electronically unless the IRS approves a waiver.<\/p>\n \nSeveral Subcontractors. Different Jobs. One Place to File Their 1099s.<\/h4>\nTax1099 helps contractors collect W-9s, verify TINs, upload payment details, eFile Forms 1099-NEC, and send copies to subcontractors.<\/p>\n | | | | | | |