Mid-Year 1099 Updates

Businesses typically file Form 1099 to report certain payments made to individuals or other businesses to the IRS. The IRS uses these forms to help verify that recipients have accurately reported the full amount of income they received. Individuals and businesses that receive these forms should use them to verify their income when preparing their tax returns. All income should be reported even if a 1099 is not issued.

To ensure Form 1099s are accurately filed, it is helpful to collect a vendor’s Form W-9 before releasing payment. A completed W-9 provides verification of the vendor’s name, address, employer identification number (EIN)/ taxpayer identification number (TIN), and Federal Tax Classification. The TIN is required for the filing of a Form 1099. If a vendor refuses to provide a W-9, the IRS requires the business to withhold 24% on all future payments and to save documentation of the requested attempts.

Form 1099-MISC

There are several different types of Form 1099s filed each year. One of the more common types is Form 1099-MISC, Miscellaneous Information. This is filed for each vendor that has been paid any of the following during the year:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
• At least $2,000 in total payments:
  • Rent
  • Prizes and awards, including certain non-government grants
  • Other income payments
  • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
  • Any fishing boat proceeds
  • Medical and health care payments
  • Crop insurance proceeds
  • Gross proceeds paid to an attorney (e.g., settlement payouts, damage rewards, etc.)
  • Section 409A deferrals
  • Non-qualified deferred compensation

Form 1099-NEC

Another common type of Form 1099 is Form 1099-NEC, Nonemployee Compensation. This form is predominantly used for contract labor. It needs to be filed for each vendor that has been paid any of the following during the year:

• At least $2,000 in total payments:
  • Services performed by someone who is not your employee
    • Services include repairs, maintenance, cleaning, lawncare, custom work, and other contracted services
  • Payments to an attorney (legal services)

Form 1099-K

Form 1099-K is a separate form sent to a business from their payment processor, which includes Stripe, Square, PayPal, Venmo, and Amazon Pay. The business should receive this form by the end of January. This form should be sent to the business’s accountant, as it is used to verify that the reported income being filed by the business is accurate and not under reported.

Listed are payment types that will receive a 1099-K:

• Goods the business sells
• Services the business provides
• Property the business rents
• Payment apps
• Online community marketplaces
• Auction sites
• Car sharing or ride-hailing platforms
• Ticket exchange or resale site
• Crowdfunding platform
• Freelance marketplace

Filing Deadlines

Form 1099 is due to recipients by January 31^st each year. The IRS and individual states may have their own filing deadlines beyond that date; however, it is best practice to file everything by January 31^st. Late or incomplete filings result in penalties and fines. A business who chooses not to file required 1099s also risks penalties for noncompliance.

Changes for 2026 Filings

There are some new changes for the 2026 filing season, which is completed during January 2027. For both Form 1099-MISC and Form 1099-NEC, the filing threshold has been increased from $600 to $2,000. This new threshold adjusts for inflation and is a more reasonable filing threshold for those services.

There are also some notable changes to Form 1099-K in 2026. A third-party settlement organization is now required to report payments that total at least $20,000 and the total number of transactions is above 200. There is no threshold for payment cards (credit/debit cards). The previous address fields for the Filer and Payee information have been separated into individual fields. New box 1c requires the reporting of cash tips, and new box 1d is used for identifying the tipped occupation.

Filing Tools

Business owners are required to file appropriate 1099s to remain in compliance with the IRS. If they do not file them, they can incur fees and penalties. While a 1099-K is filed by the merchant provider, a business needs to file any required 1099-NEC and 1099-MISC, along with other types, such as 1099-DIV (dividends paid) and 1099-INT (interest paid to an individual or business, not a bank).

If a business has 10 or more total 1099s to file, they are required to file electronically. There are various software options available to assist with the process. Fee-based software options include QuickBooks Online, Avalara Track1099, and Tax1099. The IRS has a free filing system, as well, called Information Returns Intake System (IRIS). Corrections and requests for automatic extensions can also be filed through IRIS. To use IRIS, a Transmitter Control Code (TCC) is needed. It is recommended to apply for a TCC code before the end of the year rather than delay until January.

Preparing now will set up a business for a successful 1099 filing season in January. To learn more about the filing requirements for 1099s or for assistance with getting started, please contact a member of the EAS team.

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This article was written by EAS intern Jade Burkhart under supervision of Supervisor Becky Lauffer during McKonly & Asbury’s 2026 Summer Internship Program.

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