Form 1099-NEC
Nonemployee Compensation
Agency
IRS
Version
2025 Tax Year
Fee
Free
Deadline
Furnish to recipient and file with IRS by January 31 of the following year.
Official PDF hosted at www.irs.gov · Verified 2026-05-19
Who Needs This Form
- Businesses paying $600+ to a non-employee for services
- Freelancers and independent contractors receiving payment
- Sole proprietors and single-member LLCs invoicing US clients
- Gig workers (rideshare, delivery, consulting) earning above the threshold
- Attorneys receiving fees from a business
Step-by-Step Guide
Form 1099-NEC reports payments of $600 or more made during the year to a non-employee for services performed in the course of your trade or business. Businesses file it; freelancers receive it and use it to file their own returns. This is not tax advice — consult a CPA for your specific situation.
Payer information (top-left block)
The business filing the 1099. Use the exact legal name and address the IRS has on file for your business.
Payer's name, address, ZIP
Legal business name (not DBA), full mailing address. Must match your EIN registration with the IRS.
Payer's TIN
Your Employer Identification Number (EIN), XX-XXXXXXX.
Common mistake: Sole proprietors using their SSN instead of an EIN. Get an EIN for free at irs.gov/EIN — it keeps your SSN off contractor records.
Payer's phone number
Used by the IRS for matching questions only. Not on the recipient's copy.
Recipient information (top-right block)
The non-employee you paid. Pull these straight from the W-9 they gave you — do not retype the TIN.
Recipient's name
The name on Line 1 of their W-9 (legal name for sole proprietors; entity name for LLCs taxed as corporations or partnerships).
Recipient's address
Their address from W-9 Lines 5-6. This is where you'll mail their copy.
Recipient's TIN
SSN or EIN from W-9 Part I. If they refused to provide one, you must backup withhold at 24% on all payments and report that under Box 4.
Common mistake: Filing 1099-NEC with the wrong TIN. If the IRS's name/TIN match fails, you'll get a CP2100 or CP2100A notice and must begin backup withholding.
Account number (optional)
Useful if you file multiple 1099s for the same recipient (separate projects, different teams).
Box 1 — Nonemployee compensation
The total dollar amount of services payments to this non-employee during the calendar year, BEFORE any backup withholding deduction.
What counts as compensation
Fees for services, commissions, prizes and awards for services rendered, expenses paid to attorneys (regardless of amount), and any other payment that is in the nature of compensation for services performed in your trade or business.
What does NOT count
Reimbursements for materials, mileage at the IRS standard rate, per-diem at federal rates, payments to corporations (except attorneys), wages already reported on W-2, payments for goods.
Tip: If you're not sure whether a payment goes on 1099-NEC or 1099-MISC, look at what you got — services usually = NEC; rent, royalties, prizes for non-service activities = MISC.
Box 2 — Direct sales of $5,000+
Mark with an 'X' (no dollar amount) if you made consumer-product sales of $5,000+ to the recipient for resale anywhere other than a permanent retail establishment (direct-sales/MLM scenarios).
When to check Box 2
Direct-sales companies (Tupperware, Mary Kay, Avon distributors). Rarely applies to typical service businesses.
Box 4 — Federal income tax withheld
Backup-withheld amounts only. Most 1099-NEC filers leave this blank.
When you withhold
If the recipient didn't provide a TIN, provided an incorrect TIN (CP2100 notice), or was subject to backup withholding for under-reported interest/dividends, you withhold 24% of every payment.
Common mistake: Forgetting to remit backup withholding to the IRS using Form 945. Box 4 and your 945 deposits must match.
Boxes 5-7 — State info
State copy of withholding and state income shown for the recipient's state return. Required only in states that participate in the Combined Federal/State Filing program OR if you withheld state tax.
Box 5 — State tax withheld
Only if you withheld state income tax from the contractor.
Box 6 — State / Payer state no.
Two-letter state code and your state withholding ID number.
Box 7 — State income
State-allocable portion of Box 1.
Common Mistakes to Avoid
Issuing 1099-NEC to a corporation (when you shouldn't)
Payments to C-corporations and S-corporations are generally NOT reportable on 1099-NEC. The exceptions: attorneys (always reportable regardless of entity) and certain medical/healthcare payments (those go on 1099-MISC, not 1099-NEC).
Fix: Check the W-9 — if Line 3 says C corporation or S corporation and they're not an attorney, you usually don't file 1099-NEC. When in doubt, file anyway: there's no penalty for over-reporting.
Mixing services and materials in Box 1
Only the services portion of an invoice is reportable. If a contractor billed $5,000 for services + $1,000 for materials/parts, Box 1 should be $5,000, not $6,000.
Fix: Require contractors to itemize services vs. materials on every invoice. Only the services line goes into Box 1.
Missing the $600 threshold by aggregating across years
The $600 threshold applies per calendar year per recipient. Three payments of $300 each in the same year (=$900) DOES require a 1099. Three $300 payments across three different years do not.
Fix: Maintain a running total per contractor per calendar year. Any contractor crossing $600 gets a 1099-NEC.
Filing 1099-NEC for an employee
Employees get W-2, never 1099-NEC. Mis-classifying employees as contractors triggers IRS payroll-tax audits and back-pay liability.
Fix: Use the IRS common-law factors (behavioral control, financial control, type of relationship) to determine status. If unsure, file Form SS-8 with the IRS for a binding determination.
Missing the January 31 deadline
1099-NEC has the same January 31 deadline for BOTH furnishing to the recipient AND filing with the IRS — there's no extra paper-vs-electronic gap like the old 1099-MISC.
Fix: Calendar January 31 as a hard deadline. Late filing penalties range from $60 to $660 per form depending on how late.
Using the wrong year's form
1099-NEC forms are year-specific. Filing 2025 payments on a 2024 form (or vice versa) is rejected by the IRS.
Fix: Always download the form for the tax year you're reporting from irs.gov. The year is printed at the top of the form.
Forgetting to file Form 1096 (paper filers only)
If you file 1099s on paper, you must submit Form 1096 as a cover/transmittal summarizing the batch. Electronic filers skip 1096.
Fix: Use IRIS (irs.gov/iris) or FIRE to file electronically — no 1096 needed and the deadlines are the same.
Reporting net of credit-card fees instead of gross
If you paid a contractor through a credit card, third-party network (PayPal, Venmo for Business, Stripe), or marketplace, the third party files 1099-K — you should NOT also file 1099-NEC. Filing both creates duplicate income for the recipient.
Fix: Exclude credit-card and third-party-network payments from your 1099-NEC totals. The processor handles 1099-K reporting separately.
Fill Online — Free
Fill Form 1099-NEC in your browser
Nonemployee Compensation. Step through the fields below, then download a filled PDF — your data never leaves this page.
Step 1 of 4
Payer information (your business)
The business filing the 1099. Use the legal business name and EIN — not your DBA. This must match your IRS registration.
Four-digit year being reported.
Check only if this is a corrected return.
Type your business identity exactly as registered with the IRS. The PDF accepts a multi-line block.
Your business EIN. Sole proprietors without an EIN may use SSN — but get a free EIN at irs.gov/EIN to keep your SSN private.
Related Forms
See all forms →Forms commonly used alongside this one.
Related Guides
- Tax Filing Guide
Income tax brackets, sales tax, property tax, and total tax burden for every US state — sourced from Tax Foundation and IRS, with step-by-step filing guides for each state.
- Small Business Setup & Compliance
Form an LLC or corporation, understand state tax obligations, find licensing requirements, and connect with SBA and SBDC resources in every US state — verified against Secretary of State portals, Tax Foundation, and the U.S. Small Business Administration.
Frequently Asked Questions
Who has to file 1099-NEC?
Any business that paid $600+ to a non-employee for services during the calendar year. 'Business' includes sole proprietors, partnerships, LLCs, and corporations. Personal payments (paying your housekeeper, your gardener for your personal home) generally do NOT require 1099-NEC.
What's the difference between 1099-NEC and 1099-MISC?
1099-NEC is for services payments to non-employees ($600+). 1099-MISC is for rent, royalties, prizes/awards (non-service), medical payments, and miscellaneous income. Before 2020 NEC was a box on MISC; the IRS split them out to fix a deadline mismatch.
Do I need to file 1099-NEC for payments by credit card or PayPal?
No. The payment processor (Visa, PayPal, Stripe, etc.) files 1099-K for those payments. Filing 1099-NEC on top would create duplicate income reporting. Only file 1099-NEC for direct payments (check, ACH, cash, Zelle person-to-person).
What if my contractor refuses to give me a W-9?
You must begin backup withholding at 24% on every payment to them and remit those amounts to the IRS using Form 945. Report the backup withholding on Box 4 of the 1099-NEC. This is required by IRC §3406.
Can I file 1099-NEC electronically?
Yes — use IRS IRIS (Information Returns Intake System) at irs.gov/iris (free) or commercial software. Electronic filing is required for filers with 10+ information returns of any type as of tax year 2023.
I'm a freelancer — do I file 1099-NEC?
You receive 1099-NEC from your clients; you don't file it. Take the Box 1 amount and report it as gross income on Schedule C (Profit or Loss from Business) when you file your personal return. You'll also owe self-employment tax (Schedule SE).
What if a 1099-NEC I received has wrong amounts?
Contact the payer ASAP and ask them to issue a Corrected 1099-NEC. If they refuse or are unreachable, report your actual gross income (your records) on your return — the IRS prioritizes the recipient's records when there's a documented disagreement, but expect a CP2000 notice and prepare your evidence.
Do I need to send a 1099-NEC to the state too?
Depends on the state. Many states participate in the Combined Federal/State Filing program — filing once with the IRS satisfies state filing. Others (like Pennsylvania, Massachusetts, certain others) require a separate state submission. Check your state revenue department's filing requirements.
Sources
Disclaimer: Mubboo Editorial Team. This guide is for general information only and is not tax, legal, or immigration advice. Tax and immigration rules change — always confirm with the official agency, a licensed tax professional, or an immigration attorney before relying on these instructions for filing.