For 2026 payments reported in 2027, Form 1099-NEC nonemployee compensation reporting generally starts at $2,000 instead of $600, while backup withholding still requires reporting even below the normal threshold. Form 1099-G also adds Box 10 for family leave benefits. Some Form 1099-G payments use the applicable reporting threshold, while unemployment compensation and state or local income tax refunds are still reported at $10 or more.<\/p>\n
If you\u2019ve ever stared at two forms and wondered, \u201cForm 1099-NEC vs. Form 1099-G: which one do I file?\u201d, you\u2019re not alone. The difference between Form 1099-NEC and Form 1099-G boils down to government payments vs. nonemployee compensation, and choosing wrong can trigger IRS penalties. Continue reading this blog to understand what is reported on Form 1099-NEC and Form 1099-G, and when to use each form.<\/p>\n
File late or file the wrong form and you may face IRS penalties based on how late the correction is and whether the issue involved intentional disregard. If you file Form 1099-NEC when it should\u2019ve been Form 1099-G, you may need to correct the return; CP2100 or CP2100A notices are for incorrect name\/TIN combinations.<\/p>\n
FIRE is retired for the 2027 filing season, so 2026 information returns go through IRIS. Still, payment has to be reported on the right form and in the right box. If a government payment is filed on Form 1099-NEC instead of Form 1099-G, or if the box entry does not match the payment type, the filing may hit IRIS errors, get rejected, or need corrections later.<\/p>\n
The wrong form can negatively impact your payee\u2019s Form 1040 reporting. It can throw off their withholding, state returns, and even delay your own year-end close.<\/p>\n
This is the hard line: government payments vs. nonemployee compensation. If you can\u2019t tell which side you\u2019re on, you\u2019re going to file the wrong form.<\/p>\n
Form 1099-NEC for contractor pay reports nonemployee compensation for services. Do not use it for Form 1099-G-type grants, refunds, and certain government payments.<\/p>\n
The IRS brought back Form 1099-NEC in 2020 to separate nonemployee compensation from Form 1099-MISC. It makes it clear when you paid someone for services.<\/p>\n
A trade or business may need to file Form 1099-NEC<\/a> when it pays an independent contractor, freelancer, attorney for services, gig worker, or similar service provider. This can include sole proprietors, partnerships, LLCs, and corporations.<\/p>\n A business generally needs Form 1099-NEC for 2026 payments if nonemployee compensation to a payee reaches $2,000 or more. Corporations are usually not reported on this form, unless the payment falls under legal services or another reportable exception.<\/p>\n The filing trigger is $2,000 or more in 2026 nonemployee compensation that needs to be reported in the 2027 filing season. If backup withholding was required, file Form 1099-NEC regardless of the payment amount.<\/p>\n Box 1a of Form 1099-NEC:<\/strong> Enter the nonemployee compensation.<\/p>\n Box 4:<\/strong> Report backup withholding at 24% if backup withholding was required, such as when the payee did not provide a TIN or the IRS told you the TIN was incorrect.<\/p>\n Unlike for many other 1099 forms, the recipient copy and IRS copy for Form 1099-NEC are both due by February 1, 2027, because January 31 falls on a Sunday.<\/p>\n If the payee has not provided any TIN (after TIN solicitation), or the IRS later tells you that the TIN is incorrect, backup withholding may apply at 24%. That withheld amount goes in Box 4, and you report it on your Form 945.<\/p>\n When you ask, \u201cWhat is reported on Form 1099-NEC?\u201d, the answer is simple: service payments to nonemployees, not Form 1099-G-type government payments. That clarity is the core of Form 1099-NEC vs. Form 1099-G.<\/p>\n Form 1099-G is for certain government payments, including unemployment compensation, state or local tax refunds, taxable grants, agricultural payments, reemployment trade adjustment assistance payments, and state paid family leave benefits reported in the new Box 10. Use Form 1099-G for certain government payments, not service payments to contractors.<\/p>\n Note:<\/strong> Also check these less common Form 1099-G boxes before deciding the payment belongs on Form 1099-NEC: Box 5 reports Reemployment Trade Adjustment Assistance payments, Box 7 reports agricultural payments such as certain USDA subsidies, Box 8 is checked when a Box 2 refund relates to trade or business income, Box 9 reports market gain on certain Commodity Credit Corporation loans, and Box 10 is used for governmental paid family leave benefits beginning with the 2026 form revision.<\/p>\n Only federal, state, and local government units can issue Form 1099-G. Private businesses cannot use it for contractor payments, as there is a separate form for that purpose.<\/p>\n For 2026 Form 1099-G, furnish recipient copies by February 1, 2027, because January 31 falls on a Sunday. File with the IRS by March 1, 2027, if filing on paper, or March 31, 2027, if e-filing.<\/p>\n Voluntary 10% withholding may apply to unemployment compensation when requested on Form W-4V. If backup withholding applies to a reportable payment, then the withholding and the payment need to be reported on the correct Form 1099, including Form 1099-G, even if the payment is below the normal reporting threshold.<\/p>\n Once you see what is reported on Form 1099-G, you won\u2019t confuse it with Form 1099-NEC again. And when you\u2019re wondering when to use Form 1099-G, remember: use it for certain government payments, not contractor service payments.<\/p>\n 1099-NEC vs. 1099-G Side-by-Side Comparison<\/p>\n For the recipient, the tax return path is different too. Form 1099-NEC usually points to business or self-employment income, so the recipient generally reports it on Schedule C and may owe self-employment tax on net earnings. Form 1099-G does not work that way. Unemployment compensation is generally reported on the unemployment compensation line of the tax return, state or local tax refunds are taxable only when the prior-year deduction created a federal tax benefit, and Form 1099-G income is not treated as nonemployee compensation just because the recipient also freelances.<\/p>\n Understand Form 1099-NEC vs. Form 1099-G to reduce filing errors and penalty risk.<\/p>\nFiling Trigger<\/h4>\n
Boxes to Complete<\/h2>\n
Critical Deadline<\/h4>\n
Withholding Mechanics<\/h4>\n
Top Mistakes<\/h4>\n
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Form 1099-G Explained<\/h2>\n
What is reported on Form 1099-G?<\/h4>\n
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\n \nBox<\/th>\n Payment Type<\/th>\n Threshold<\/th>\n Notes<\/th>\n<\/tr>\n<\/thead>\n \n 1<\/td>\n Unemployment compensation<\/td>\n $10+<\/td>\n Unemployment compensation is generally taxable for federal income tax; elective 10% withholding may apply through Form W-4V.<\/td>\n<\/tr>\n \n 2<\/td>\n State\/local tax refunds<\/td>\n $10+<\/td>\n May be taxable if the recipient deducted the state or local income tax in the prior year.<\/td>\n<\/tr>\n \n 6<\/td>\n Taxable grants<\/td>\n $2,000+ for 2026 payments reported in 2027, where the updated threshold applies<\/td>\n Report taxable grants from government agencies.<\/td>\n<\/tr>\n \n 7<\/td>\n Agricultural payments<\/td>\n No specific dollar threshold listed<\/td>\n Report USDA agricultural subsidy payments made during the year.<\/td>\n<\/tr>\n \n 10<\/td>\n Family leave benefits<\/td>\n $2,000+ for qualifying state paid family and medical leave program payments<\/td>\n New Box 10 for state paid family and medical leave program payments.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Issuer Restriction<\/h4>\n
Deadlines<\/h4>\n
Withholding on Form 1099-G<\/h4>\n
Common Errors<\/h4>\n
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\n \nFeature<\/th>\n Form 1099-NEC<\/th>\n Form 1099-G<\/th>\n<\/tr>\n<\/thead>\n \n What it reports<\/td>\n Nonemployee compensation<\/td>\n Unemployment compensation, state or local income tax refunds, grants\/subsidies, agricultural payments, RTAA payments, and state paid family leave benefits<\/td>\n<\/tr>\n \n Issuer<\/td>\n Trades or businesses, including nonprofits, that pay nonemployees for services<\/td>\n Federal, state, and local government units<\/td>\n<\/tr>\n \n Threshold<\/td>\n $2,000 for 2026 Form 1099-NEC nonemployee compensation, or any amount if backup withholding applies<\/td>\n $10+ for unemployment compensation and state\/local tax refunds; $2,000+ for applicable taxable grants, RTAA payments, and governmental paid family leave program payments<\/td>\n<\/tr>\n \n Key Boxes<\/td>\n Box 1a to report nonemployee compensation; Boxes 1b\u20131d for cash tips, Treasury tipped occupation code, and overtime compensation when applicable; Box 4 for backup withholding<\/td>\n Box 1 reports unemployment compensation; Box 2 reports state or local tax refunds, credits, or offsets; Box 5 reports RTAA payments; Box 6 reports taxable grants; Box 7 reports agricultural payments; Box 10 reports family leave benefits paid by state paid family and medical leave programs<\/td>\n<\/tr>\n \n Payee Due<\/td>\n February 1, 2027, for 2026 forms<\/td>\n February 1, 2027, for 2026 forms<\/td>\n<\/tr>\n \n IRS Due (Paper\/E-file)<\/td>\n Both paper and e-filing: February 1, 2027, for 2026 Form 1099-NEC<\/td>\n Paper file: March 1, 2027, if paper filing is allowed. E-file: March 31, 2027. You must e-file if you file 10 or more information returns in total, aggregated across form types.<\/td>\n<\/tr>\n \n Withholding<\/td>\n Backup withholding may apply at 24% if the payee does not provide a TIN or the IRS tells you the TIN is incorrect.<\/td>\n Voluntary withholding: 10% withholding may apply to unemployment compensation when requested on Form W-4V. Backup withholding: 24% withholding may apply to payments reported in Boxes 5, 6, or 7.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n