Glossary
Form 1099-NEC
The form a business files to report $600 or more paid to a US non-employee (contractor, freelancer, agency) in a year, due to the recipient and the IRS by the start of February.
NEC stands for non-employee compensation. The threshold is $600 for 2025 payments, rising to $2,000 for payments made in 2026 onward under the 2025 legislation. The form is due February 2, 2026 for 2025 payments, with no extension for the recipient copy. Payments by card or through a payment platform are reported by the platform on a 1099-K instead, so a business paying contractors through PayPal Goods and Services does not file the 1099-NEC for those.
A W-9 collected before the first payment is what makes January easy. Penalties are per form and rise the later the filing, and the IRS matches 1099s against the recipient's return.
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