SpieglerBlevins is advising business owners across the Tri-Cities that the reporting threshold for Forms 1099-NEC and 1099-MISC has risen from $600 to $2,000 for payments made during 2026. The change was enacted in Public Law 119-21, known as the One Big Beautiful Bill Act, and it governs the forms businesses will furnish to contractors and the Internal Revenue Service (IRS) early in 2027. A higher threshold reduces the number of forms many businesses must issue, although it does not reduce the record keeping that determines which forms are required. Owners who assume the change removes the need to collect vendor information will find the error in January, when the forms are due and missing records are hardest to obtain.
What changed for payments made in 2026?
SpieglerBlevins confirms that the threshold for reporting nonemployee compensation on Form 1099-NEC is $2,000 for payments made in 2026, compared with the $600 threshold that applied through 2025. The same $2,000 threshold applies to rents, to medical and health care payments and to most other payment types reported on Form 1099-MISC. The threshold at which a business must begin backup withholding on a payee who has not furnished a taxpayer identification number moved to $2,000 as well. The IRS instructions state that the threshold may be adjusted for inflation beginning in calendar year 2027, so the figure in effect should be confirmed each year rather than assumed. Our team can advise you on which of the payments your business made in 2026 now fall above or below the reporting line.
Which payments still require a Form 1099?
SpieglerBlevins applies the same tests it applied before the change, because only the dollar threshold moved while the underlying rules remained in place. A business generally reports payments of $2,000 or more made in the course of its trade or business for services and rents paid to individuals, partnerships and limited liability companies not taxed as corporations. Payments to most corporations remain exempt, although payments to attorneys and payments for medical and health care services are generally reported regardless of the payee’s corporate status. Payments for merchandise and personal payments made by an owner, such as a contractor hired to renovate a residence, are not reported by the business at all. Our team performs this vendor classification every month for each business on a recurring engagement, before any form is prepared.
Why do vendor records matter more than the threshold?
SpieglerBlevins finds that the threshold itself rarely causes reporting errors, because most errors originate in vendor records that were collected late or not at all. A Form W-9 establishes the payee’s legal name, tax classification and taxpayer identification number, and each of those three facts determines whether a form is required and what it must show. A vendor paid $1,800 in March and $900 in October crosses the threshold during the year, so the classification has to be known before the second payment rather than reconstructed in January. Businesses that request the Form W-9 at onboarding, before the first payment is released, avoid most of the problems that otherwise surface when the forms are prepared.
The January version of the same task is considerably harder, because the contractor relationship has usually ended by the time the request arrives. Contractors who completed their work months earlier respond slowly or not at all, and the names on their invoices often differ from the legal names on their tax records. A business that cannot obtain a taxpayer identification number may also face backup withholding obligations and penalties for incorrect information returns. Our team can advise you on a vendor onboarding procedure that captures the Form W-9 before any payment is made.
Does the threshold change affect Form 1099-K?
SpieglerBlevins also receives questions about Form 1099-K, which payment apps, online marketplaces and card processors issue to report payments received through their networks. For payment apps and online marketplaces, known as third party settlement organizations, current law requires a form only when payments exceed $20,000 across more than 200 transactions in a calendar year. Payments received through a merchant card account are reported regardless of amount, and a platform may issue a form below the threshold in any event. Income remains taxable whether or not a form is received, which is why the form should match the books rather than define them. Our team reconciles platform and processor reports to the books every month for clients on a recurring engagement, so a Form 1099-K does not arrive as a surprise.
What should a business complete before Dec. 31?
SpieglerBlevins works through the following five-step sequence with businesses preparing their 2026 information returns, ideally during November and the first half of December. Each step is easier to complete before the holidays than in January, because vendors remain responsive and the year’s payment history is still open for correction. The sequence applies equally to a dental practice paying a locum dentist, a restaurant paying a musician and a contractor paying a subcontractor.
- The business identifies every payee paid $2,000 or more during 2026, excluding payments made by credit card or through a payment platform, which the card processor or platform reports instead.
- The business confirms that a current Form W-9 is on file for each of those payees and requests one promptly from any payee who has not supplied it.
- The business compares the legal name and taxpayer identification number on each Form W-9 with the vendor name in its accounting system, because a mismatch produces an IRS notice months later.
- The business separates payments for services, rents and medical services from payments for goods, which are generally not reportable on either form.
- The business adopts a standing rule that no new vendor receives a first payment until a completed Form W-9 is on file.
Forms 1099-NEC reporting 2026 payments must be furnished to recipients and filed with the IRS by Feb. 1, 2027, because Jan. 31 falls on a Sunday. Businesses that complete the sequence above before the holidays prepare those forms from complete records rather than from a list of follow-up requests. SpieglerBlevins performs this work every month for clients on a recurring engagement, so year-end reporting becomes a review of records already collected rather than a search for missing ones.
Frequently asked questions
Does a business still need a Form W-9 from a vendor paid less than $2,000?
Collecting a Form W-9 from every vendor remains sound practice, because a vendor’s total for the year is rarely known at the first payment. A vendor below the threshold in November can exceed it in December, and the form also supports any backup withholding decision the business has to make.
Does the $2,000 threshold apply to payments made in 2025?
The $2,000 threshold applies to payments made after Dec. 31, 2025, so the forms reporting 2025 payments, which were filed early in 2026, used the $600 threshold. Any corrected form for a 2025 payment follows the rules that applied in 2025 rather than the new $2,000 threshold.
Will the 1099 threshold change again after 2026?
The current IRS instructions for Forms 1099-MISC and 1099-NEC state that the $2,000 threshold may be adjusted for inflation beginning in calendar year 2027. The figure in effect for each year should be confirmed when that year’s forms are prepared rather than carried forward from the prior year.
Are payments to an incorporated vendor reportable?
Payments to most corporations are not reportable on Form 1099-NEC, although payments to attorneys and payments for medical and health care services are generally reportable regardless of corporate status. The tax classification shown on the vendor’s Form W-9 determines which treatment applies, which is another reason to collect the form before paying.