If you paid anyone who is not your employee $600 or more for services during the year, you probably owe them and the IRS a 1099-NEC by January 31.
Who gets one
- Independent contractors, freelancers, subcontractors paid $600 or more for services.
- Paid by check, cash, ACH, Zelle or Venmo (personal). Payments by credit card or through platforms like PayPal Goods and Services or Upwork are reported by the processor on 1099-K, not by you.
- Not corporations (except law firms). Not employees (they get a W-2).
What you need
A W-9 from each contractor before you pay them: legal name, address, tax ID, entity type. Collect it up front; chasing it in January is miserable.
Getting the totals
Your books should answer 'how much did I pay each vendor this year' in one click. In ProfitBooks, contractor payments are categorized as contract labor and the year-end vendor totals export with names and amounts.
Filing
File with the IRS (electronically if you have 10 or more forms of any type) and furnish to the contractor by January 31. Most payroll and tax services e-file 1099s for a few dollars each.