Form 1099-NEC vs 1099-MISC: Which One to Send

The short version

Form 1099-NEC is for nonemployee compensation: money you pay in the course of your business to someone who is not your employee, for services. Form 1099-MISC is for most other reportable business payments that are not for services. The IRS instructions list them box by box.

Box 1a on the NEC is the one most small businesses fill in. Box 2 on the NEC, and box 7 on the MISC, are checkboxes for direct sales of consumer products of $5,000 or more. Box 4 on both forms shows federal income tax you withheld, and if you withheld under the backup withholding rules you file a 1099-NEC regardless of the amount of the payment.

The four-part test for box 1a

The instructions say a payment is generally nonemployee compensation when all four of these are true:

1. You paid someone who is not your employee.
2. You paid for services in the course of your trade or business. Government agencies and nonprofits count as businesses here.
3. You paid an individual, a partnership, an estate or, in some cases, a corporation.
4. Your payments to that payee were at least $2,000 during the year.

Box 1a covers fees, commissions, and prizes and awards for services performed as a nonemployee. It also includes parts or materials used to do the work, when supplying them was incidental to the service. A technician who fixes your office printer and bills a replacement part with the labor is paid for a service, and the whole amount goes in box 1a. An LLC that is taxed as a C or S corporation is treated like a corporation, so it generally does not get a form. The W-9 the contractor gives you shows how the business is taxed.

The threshold went from $600 to $2,000

For payments made in 2025 and earlier, the line for nonemployee compensation and most MISC boxes was $600. Section 70433 of the One, Big, Beautiful Bill Act raised the $600 threshold in the tax code to $2,000, and the IRS proposed regulations say the change applies to payments made after December 31, 2025. The current instructions say the threshold may be adjusted for inflation starting in calendar year 2027.

Two amounts did not move: royalties are still reported from $10, and gross proceeds paid to an attorney, box 10 of the MISC, from $600. The $2,000 is a total per payee for the year, not per invoice, so three invoices of $800 to the same freelancer add up to $2,400 and need a form.

Worked example: sorting a year of payments

A small studio made these payments in 2026. Each one is sorted by the rules above.

The studio sends 2 Forms 1099-NEC and 3 Forms 1099-MISC. Under the old $600 rule, the $1,800 paid to the freelance designer would also have needed a form; at $2,000 it does not. The contractor paid by card is left out because card payments are reported on Form 1099-K by the processor, and the office supplies are merchandise, which is not reported. The Form 1099-K guide covers that form.

Deadlines for 2026 payments

The 1099-NEC has one deadline for both copies. The 1099-MISC has a recipient deadline and a later IRS deadline. When a due date falls on a weekend or legal holiday, it moves to the next business day.

The dates in the last column only check for weekends. A legal holiday on one of those days would move it again.

What you do not report

• Personal payments. Only payments made in the course of your trade or business count. Paying a plumber at home does not.
• Payments to corporations. Generally exempt, except attorney fees and legal services, medical and health care payments, and a few others.
• Merchandise and similar items. Payments for merchandise, telephone, freight and storage are not reported.
• Employee wages. These go on Form W-2. If you are not sure whether someone is an employee or a contractor, the guide to W-2 vs 1099 covers how that is decided.
• Card and payment network payments. Reported on Form 1099-K instead.

If you are the one receiving the form

The copy you get shows what the payer reported to the IRS for you. With the higher threshold, a client who paid you $1,500 over the year no longer has to send one, so your own records matter more than before. The invoices from an invoice generator show what you billed, to whom and when, and you can total them per client to check each form that does arrive. Compare the box 1a figure with your own total for that client; a difference usually comes from timing, such as an invoice paid in early January. If you work for yourself, the self-employment tax calculator and the income tax calculator help estimate what you owe on the year's income.

A year-end checklist for payers

1. Collect a Form W-9 from every contractor before the first payment; the W-9 guide explains what it shows.
2. Total each payee's 2026 payments by type: services, rent, royalties, prizes.
3. Drop card payments, merchandise, personal payments and most corporations.
4. Compare each total with $2,000, or $10 for royalties.
5. Send the 1099-NEC to contractors and the IRS by February 1, 2027.

For payments to nonresident aliens the instructions point to Form 1042-S instead. A contractor based outside the United States usually gives you a different form as well; the guide to Form W-8BEN covers that case.

Frequently asked questions

Sources

• IRS Instructions for Forms 1099-MISC and 1099-NEC, Rev. December 2026 ($2,000 threshold for tax years beginning after 2025; box 1a nonemployee compensation and attorney fees; 1099-MISC boxes 1, 2, 3, 4, 6 and 10; $10 royalties; January 31, February 28 and March 31 deadlines; card payments on 1099-K; payments to corporations and for merchandise; personal payments not reportable; backup withholding regardless of amount)
• Internal Revenue Bulletin 2026-19, REG-113229-25 (One, Big, Beautiful Bill Act section 70433 raised the $600 threshold in section 6041 to $2,000, effective for payments made after December 31, 2025)

General information based on the sources above, not tax, legal or financial advice.

Written by Tobias. Updated November 2, 2026.