1099-NEC vs 1099-MISC: Which Form to Send (2026)

Until 2020 everything went on the 1099-MISC and box 7 was the busiest box on the form. The IRS then split nonemployee compensation back out onto its own form, the 1099-NEC, largely so it could give it an earlier deadline. Six years on, small payers still mix the two up, and 2026 adds a second thing to get right: the dollar threshold that triggers a form has moved for the first time since 1954.

The one-sentence rule

If you paid someone for work they did, use the 1099-NEC. If you paid them for anything else, use the 1099-MISC.

What changed for 2026

The reporting threshold under IRC sections 6041 and 6041A was $600 from 1954 through 2025. The One Big Beautiful Bill Act raised it to $2,000 for payments made after December 31, 2025, with inflation indexing from calendar year 2027. That applies to nonemployee compensation on the 1099-NEC and to rents, other income, medical payments, crop insurance and section 409A deferrals on the 1099-MISC. Royalties stay at $10, and the $600 figures for gross proceeds paid to an attorney (box 10) and fish purchased for resale (box 11) come from different code sections and did not move. Direct sales of $5,000 or more for resale are unchanged.

So for payments made during 2025, reported on forms due in early 2026, the line is still $600. For payments made during 2026, reported in early 2027, it is $2,000. A contractor you paid $1,500 in 2026 gets no form at all, though the income is still taxable to them and still deductible to you; the form is a reporting requirement, not what makes the payment real.

The 2026 forms also gained boxes for the new tips and overtime deductions. The 1099-NEC's box 1 became box 1a, with 1b for cash tips, 1c for the Treasury tipped occupation code and 1d for qualified overtime compensation. The 1099-MISC picked up the same three as boxes 13a, 13b and 14, and the FATCA filing-requirement checkbox moved beside the account number. Excess golden parachute payments had already moved from the MISC's box 14 to the NEC's box 3 a year earlier, for 2025.

Who gets a 1099 at all

Three tests, all of which have to be met. First, the payment was made in the course of your trade or business; paying a plumber to fix your own kitchen is not reportable. Second, the payee is not a corporation, with two exceptions: attorneys and medical or health care providers are reportable even when incorporated. An LLC is a corporation for this purpose only if it elected to be taxed as one, which is what the W-9 tells you. Third, you paid by cash, check, ACH or wire. Card and platform payments are reported by the processor on Form 1099-K, and including them again on a 1099-NEC double-counts the payee's income.

Get a signed Form W-9 from every payee before the first payment. It gives you the legal name, the entity type, the taxpayer identification number and, since the 2024 revision, a line 3b flag for partnerships with foreign partners. A payee who will not provide a TIN is subject to 24% backup withholding, which then goes in box 4 of whichever form you file.

Form 1099-NEC, box by box

Box 1a, nonemployee compensation. Fees, commissions, prizes and awards for services, and any other compensation for services performed by someone who is not your employee, totalling $2,000 or more for 2026. Include the cost of parts and materials the contractor billed you for along with the labor, and include attorney fees for legal services. Do not include reimbursed expenses paid under an accountable plan with receipts.

Boxes 1b, 1c and 1d. New for 2026. Cash tips included in box 1a, the three-digit Treasury tipped occupation code (000 if the occupation is not on Treasury's list), and qualified overtime compensation included in box 1a. Most contractor relationships leave all three blank; they exist for tipped non-employees such as certain delivery and hospitality workers and for payees whose pay is structured with an FLSA-style overtime premium.

Box 2. A checkbox for direct sales of $5,000 or more of consumer products to the payee for resale. You may report this here or on the 1099-MISC box 7, not both.

Box 3. Excess golden parachute payments. Blank for nearly everyone.

Box 4. Federal income tax withheld, which for a 1099-NEC means backup withholding at 24% because the payee failed to furnish a TIN. If you withheld, you also owe a Form 945.

Boxes 5 through 7. State income tax withheld, the state/payer's state number, and state income. Only complete these if your state participates in the Combined Federal/State Filing Program or requires the information, and if you actually withheld state tax.

Form 1099-MISC, box by box

Box 1, rents. Office space, equipment, land, pasture and machine rentals of $2,000 or more, paid to a landlord who is not a corporation. Rent paid to a property manager or real estate agent is reported by them, not you.

Box 2, royalties. $10 or more for oil, gas, mineral or intellectual property royalties.

Box 3, other income. The catch-all: prizes and awards that were not for services, punitive damages, deceased employee's wages paid to an estate, Indian gaming profits, and payments of $2,000 or more that do not belong anywhere else. Prizes for services go on the NEC instead.

Box 4. Backup withholding, same rule as the NEC.

Box 5. Fishing boat proceeds. Box 6. Medical and health care payments of $2,000 or more to physicians, clinics and other providers, reportable even to corporations. Box 7. The direct-sales checkbox. Box 8. Substitute payments in lieu of dividends or interest. Box 9. Crop insurance proceeds. Box 10. Gross proceeds paid to an attorney of $600 or more in connection with legal services, such as a settlement check made out to the lawyer, as distinct from the lawyer's own fees, which go on the NEC. Box 11. Fish purchased for resale. Box 12. Section 409A deferrals. Boxes 13a, 13b and 14. Cash tips, tipped occupation code and qualified overtime, new for 2026. Box 15. Nonqualified deferred compensation includible in income under section 409A. Boxes 16 through 18. State withholding, state number and state income, on the same basis as the NEC.

Sorting the common cases

A freelance designer, a bookkeeper, a subcontractor on a job site, a consultant, a cleaning service run by an individual, a lawyer's fee: 1099-NEC. Office rent to an individual landlord, a prize drawing that did not require work, a settlement paid to a plaintiff's lawyer as gross proceeds: 1099-MISC. A contractor you paid entirely by card or through a freelance platform: nothing from you. A corporation's invoice for IT services: nothing, unless it is a law firm.

The payee's side of this is covered in the W-2 vs 1099 guide. If you are the contractor rather than the payer, note that no one issues you a pay stub; the contractor income summary exists for that gap, and it should reconcile to the 1099s you receive.

Copies, filing and deadlines

Each form has five copies. Copy A goes to the IRS. Copy 1 goes to the state tax department when required. Copy B goes to the recipient, Copy 2 to the recipient for their state return, and Copy C stays with you. Like the W-2, Copy A is scanned and must be the official red-ink form or an approved substitute, but you can skip that entirely by filing through IRIS, the IRS's free Information Returns Intake System. E-filing (through IRIS, FIRE or payroll software) is mandatory once you file 10 or more information returns of any kind in a year, and IRIS is the easiest route below that too.

The recipient copies can be substitutes on plain paper as long as they carry the same boxes and the recipient instructions. For the NEC, the 1099-NEC generator fills in Copies B, 2 and C for one payee; choose 2025 or 2026 so the boxes and threshold match, check the preview, and a clean PDF is $4.99 or part of a subscription. Copy A is still yours to file. For the MISC, use the recipient copies from irs.gov or your accounting software.

Deadlines differ, which is the reason the NEC exists. For payments made in 2026, the 1099-NEC is due to both the recipient and the IRS by January 31, 2027 — a Sunday, so in practice Monday, February 1. The 1099-MISC is due to recipients by the same February 1 date (February 16, 2027 if you only report in boxes 8 or 10, since February 15 is Presidents' Day), but to the IRS by March 1, 2027 on paper (February 28 is a Sunday) or March 31, 2027 electronically. The full sequence, alongside the W-2 and the Canadian slips, is in the year-end filing calendar.

Penalties are per form and per copy. For forms due in 2027 they run $60 if you correct within 30 days, $130 by August 1, and $340 after that, with intentional disregard at $690 or 10% of the amount, whichever is greater. Filing a 1099-NEC late because you thought it had the MISC's March deadline is the most common way a small payer meets these numbers.