Instructions to File 1099-NEC for 2026 Tax Year

• Payment Source: You made the payment as part of your trade or business (personal payments do not count).
• Recipient Type: The amount is paid to an individual, partnership, estate, or some cases a corporation.
• Nature of Payment: The payment was made for services rendered (including parts/materials). It’s important to note that payments for merchandise/inventory generally do not require a 1099-NEC.
• Total Amount: You paid $2,000 or more in total during the calendar year (this threshold is specifically for 2026 tax year).

Step 1:

Log in to Tax1099 and click Create Form.

Select the Tax Year and Form 1099-NEC.

If you are filing Form 1099 MISC, please check this blog. Form 1099-MISC Instructions for the 2025 Tax Year | Tax1099 Blog

Step 2:

You'll now see the 1099-NEC form with four main sections: Payer, Recipient, Federal, and State Filing Details.

Step 3:

Now let’s Add Payer Details.

If the payer is already added, click Select and choose from the existing list of payers. To add a new payer, click Add and select Individual or Business.

• For individuals: Provide their name, SSN, contact, and address.
• For businesses: Enter the Business Name, EIN, contact, and address. Click Submit once all details are entered. The payer details will now appear on the form.

Step 4:

The next step is to Add Recipient Details Similarly, if the recipient is already added, click Select and choose from the list. To add a new recipient, click Add and choose Individual or Business.

• For individuals: Provide their name, SSN, contact, and address.
• For businesses: Enter the Business Name, EIN, contact, and address. Click Submit to save the recipient details to the form.

Step 5:

Now, enter the applicable Form 1099-NEC federal and state details.

• Box 1a : Nonemployee compensation: For 2026 payments reported in 2027, enter nonemployee compensation of $2,000 or more paid for services performed by someone who is not your employee, including parts and materials when applicable. 

• Box 1b : Cash tips: Enter cash tips included in box 1a when applicable for 2026 reporting.

• Box 1c : Treasury Tipped Occupation Code(s): Enter the applicable TTOC(s) for the payee’s tipped occupation when applicable for 2026 reporting.

• Box 1d : Overtime compensation: Enter overtime compensation included in box 1a when applicable for 2026 reporting.

Note: Before you fill in Box 1, sort payments by method. Cash, checks, ACH, and direct deposits are reported on 1099-NEC as if they meet reporting requirements. Exclude payments made via credit/debit card, PayPal, Venmo, Stripe, Square, or other third-party payment networks since these are reported by the payment settlement entity on Form 1099-K. This prevents duplicate reporting and keeps the contractor from getting both 1099-NEC and 1099-K for the same income.

• Box 2 : This box is for the Direct sales. Mark this box if you sold $5,000 or more of consumer products to a person for resale on a buy-sell, deposit-commission, or other commission basis anywhere other than in a permanent retail establishment. Do not enter a dollar amount in this box.

• Box 3 : This is only for excess golden parachute payments that must be reported on Form 1099-NEC. Just because a payment isn't subject to self-employment tax, it doesn't belong here. If a payment isn't nonemployee compensation and doesn't fit Box 3, check whether Form 1099-MISC or any other return is the correct form.

• Box 4 : Federal income tax withheld: Enter any backup withholding (generally 24%) along with the payment, and file Form 1099-NEC even if the payment is below the reporting threshold.

• Box 5,6 & 7: State information :If state filing applies, complete this section. Note that states can have different filing rules and thresholds than the federal $2,000 threshold.

Step 6:

After filling out the form, click next and view the added form.

• Select USPS Mail or eDelivery to send recipient copies. eDelivery is enabled only if the recipient's email ID is provided. A consent request is sent to the recipient, and once approved, the recipient can access their copy.
• Select TIN Match to avoid IRS penalties
• Opt for State Filing, if required.

Note: State Filing option will be enabled, and you can select it only when state filing is required for that particular state. In this case, state filing is not required for this particular state, so we can’t select the checkbox for it.

Step 7:

Finally, click Action, then Submit Form Now, and proceed with Pay Now to file your form with the IRS. Now, your form has been successfully submitted to the IRS.

Step 8:

After submission, navigate to Manage Forms to view and download the recipient copy in PDF format.

eFile 1099-NEC Now