{"id":4674,"date":"2026-07-29T13:45:54","date_gmt":"2026-07-29T08:15:54","guid":{"rendered":"https:\/\/skillarbitra.ge\/blog\/?p=4674"},"modified":"2026-07-29T19:30:00","modified_gmt":"2026-07-29T14:00:00","slug":"1099-filing-season-bookkeepers","status":"publish","type":"post","link":"https:\/\/skillarbitra.ge\/blog\/1099-filing-season-bookkeepers\/","title":{"rendered":"1099 Filing Season 2026: What US Bookkeepers File, and When"},"content":{"rendered":"<!--\n  1099 Filing Season 2026 - VERSION-A\n  WP-paste-ready HTML. Paste directly into the WordPress block editor as\n  Custom HTML or via the Code Editor view.\n  - Slug: 1099-filing-season-2026-bookkeepers\n  - Last verified: 2026-07-28\n  - Schema (FAQPage) is included at the bottom in separate wp:html blocks.\n  - HowTo schema embedded inline below.\n  - VERSION-A: clean (no CTAs \/ Expert Inserts)\n-->\n\n\n<p>Last verified: 2026-07-28<\/p>\n<p>1099 filing season 2026 is the first season under the new thresholds. For payments made in calendar year 2026, the Form 1099-NEC threshold is $2,000 instead of $600, and the Form 1099-K threshold is back to more than $20,000 and more than 200 transactions. Those forms are not due in 2026. They are due in January and February 2027, which means the decisions that make them correct are being recorded in your client&#8217;s books right now. The form you file is decided by how the client paid, not by who they paid.<\/p>\n<!-- SNIPPET-BAIT START -->\n\n<hr>\n\n<p>For tax year 2026, a payer files Form 1099-NEC when they paid a non-corporate vendor $2,000 or more by cash, cheque, ACH, or wire for services. They do not file it for the same vendor&#8217;s credit card, debit card, or app payments, because the payment processor reports those on Form 1099-K. The 1099-K threshold is more than $20,000 and more than 200 transactions for third-party network payments, and there is no minimum at all for payment card transactions. Forms 1099-NEC for 2026 are due to both the recipient and the IRS on 1 February 2027.<\/p>\n<!-- SNIPPET-BAIT END -->\n\n<p>This article sets out what 1099 filing season 2026 covers, the 2026 thresholds, how to choose between Form 1099-NEC and Form 1099-K, the year-end workflow, the deadlines, and the state and penalty rules.<\/p>\n<p>Most of the writing on this subject is aimed at the US business owner and treats 1099s as a January chore. That is not how the work happens. By January, the payment method on every transaction is already recorded, the W-9s are already collected or already missing, and the vendor list is already whatever it is. A bookkeeper in July has options that a bookkeeper in January does not.<\/p>\n<p>The second thing missing from most coverage is your position in it. You are not the taxpayer here and you are usually not the filer of record either. You are preparing information returns on behalf of a US client, using their EIN, under their authority. Knowing exactly where that authority stops is part of doing the job properly, and it comes up in section seven.<\/p>\n\n<hr>\n\n<nav class=\"ls-toc\" aria-label=\"Table of contents\">\n<h2>Table of Contents<\/h2>\n<ol class=\"ls-toc-list\">\n<li><a href=\"#h2-1\">What 1099 filing season 2026 covers<\/a>\n<\/li>\n<li><a href=\"#h2-2\">The 2026 thresholds, and the three that did not move<\/a>\n<ul>\n<li><a href=\"#what-moved-to-2000\">What moved to $2,000<\/a><\/li>\n<li><a href=\"#what-stayed-where-it-was\">What stayed where it was<\/a><\/li>\n<li><a href=\"#why-one-filter-across-the-vendor-list-will-under-file\">Why one filter across the vendor list will under-file<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-3\">1099-NEC vs 1099-K: the payment method decides<\/a>\n<ul>\n<li><a href=\"#the-rule\">The rule<\/a><\/li>\n<li><a href=\"#which-rail-sends-which-form\">Which rail sends which form<\/a><\/li>\n<li><a href=\"#one-vendor-three-rails\">One vendor, three rails<\/a><\/li>\n<li><a href=\"#what-quickbooks-online-does-automatically\">What QuickBooks Online does automatically<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-4\">Which vendors get a 1099<\/a>\n<ul>\n<li><a href=\"#reading-line-3a-of-the-w-9\">Reading line 3a of the W-9<\/a><\/li>\n<li><a href=\"#the-exceptions-that-override-the-corporate-exemption\">The exceptions that override the corporate exemption<\/a><\/li>\n<li><a href=\"#employee-or-contractor-comes-first\">Employee or contractor comes first<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-5\">New boxes on the 2026 Form 1099-NEC<\/a>\n<ul>\n<li><a href=\"#what-each-new-box-holds\">What each new box holds<\/a><\/li>\n<li><a href=\"#what-changed-on-form-1099-misc\">What changed on Form 1099-MISC<\/a><\/li>\n<li><a href=\"#boxes-1b-and-1d-sit-inside-box-1a\">Boxes 1b and 1d sit inside box 1a<\/a><\/li>\n<li><a href=\"#what-to-start-capturing-now\">What to start capturing now<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-6\">The year-end 1099 workflow for bookkeepers<\/a>\n<ul>\n<li><a href=\"#filtering-a-vendor-list\">Filtering a vendor list<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-7\">1099 filing season 2026 deadlines and the end of FIRE<\/a>\n<ul>\n<li><a href=\"#the-10-return-e-file-threshold\">The 10-return e-file threshold<\/a><\/li>\n<li><a href=\"#fire-closes-iris-takes-over\">FIRE closes, IRIS takes over<\/a><\/li>\n<li><a href=\"#deadlines-for-tax-year-2026-forms\">Deadlines for tax year 2026 forms<\/a><\/li>\n<li><a href=\"#where-an-offshore-bookkeepers-scope-ends\">Where an offshore bookkeeper&#8217;s scope ends<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-8\">State filing, penalties and corrections<\/a>\n<ul>\n<li><a href=\"#states-that-did-not-follow-the-federal-2000\">States that did not follow the federal $2,000<\/a><\/li>\n<li><a href=\"#eleven-states-take-no-1099-nec\">Eleven states take no 1099-NEC<\/a><\/li>\n<li><a href=\"#the-combined-federalstate-filing-programme\">The Combined Federal\/State Filing programme<\/a><\/li>\n<li><a href=\"#penalties\">Penalties<\/a><\/li>\n<li><a href=\"#how-to-correct-a-filed-1099\">How to correct a filed 1099<\/a><\/li>\n<\/ul>\n<\/li>\n<li><a href=\"#h2-9\">Common 1099 filing season 2026 mistakes<\/a>\n<\/li>\n<li><a href=\"#h2-10\">Frequently asked questions<\/a>\n<\/li>\n<li><a href=\"#h2-11\">References<\/a>\n<ul>\n<li><a href=\"#federal-legislation-and-the-internal-revenue-code\">Federal legislation and the Internal Revenue Code<\/a><\/li>\n<li><a href=\"#irs-forms-instructions-and-publications\">IRS forms, instructions and publications<\/a><\/li>\n<li><a href=\"#irs-guidance-and-administrative-material\">IRS guidance and administrative material<\/a><\/li>\n<li><a href=\"#state-guidance\">State guidance<\/a><\/li>\n<li><a href=\"#vendor-documentation\">Vendor documentation<\/a><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/nav>\n\n<hr>\n\n<h2 id=\"h2-1\">What 1099 filing season 2026 covers<\/h2>\n<p>1099 filing season 2026 means two different things depending on who is using the phrase. It can mean the season that ran from January to March 2026, which reported calendar year 2025 payments under the old $600 rules. Or it can mean tax year 2026, the year now in progress, whose forms go out in early 2027. This article uses the second meaning, because that is the one a bookkeeper can still act on.<\/p>\n<p>The distinction matters because every rule changed between those two years. Payments made on 15 December 2025 follow the $600 threshold and the old box layout. Payments made on 15 January 2026 follow the $2,000 threshold and a redesigned Form 1099-NEC.<\/p>\n<p>Same client, same vendor, same service, two different sets of rules, six weeks apart. A bookkeeper who reads a January 2026 article and applies it to 2026 transactions will file incorrectly.<\/p>\n<p>Three things are still fixable in July. Payment method coding is fixable, and it is the highest-value thing to check, because it decides which form the payment belongs on. Missing W-9s are fixable, though they get harder to collect the longer a vendor relationship has been running. Vendor classification in the accounting file is fixable.<\/p>\n<p>One thing is not. A payment already made to a vendor whose taxpayer identification number you never obtained cannot be undone, because backup withholding had to come out of that payment at the time.<\/p>\n<p>There is a companion piece to this from the other side of the transaction. If you also earn from US clients yourself, the rules that apply to you as the recipient are different, and we covered them separately in <a href=\"https:\/\/skillarbitra.ge\/blog\/1099-threshold-2026-freelancers\/\" target=\"_blank\" rel=\"noopener\">what the 2026 threshold change means on the payee side<\/a>. This article stays on the preparer side throughout.<\/p>\n<h2 id=\"h2-2\">The 2026 thresholds, and the three that did not move<\/h2>\n<p>The 2026 thresholds rose for most payment types but not for all of them, and the exceptions are where filings go wrong. The One Big Beautiful Bill Act, signed on 4 July 2025 as Public Law 119-21, raised the general information reporting floor in section 6041 of the Internal Revenue Code from $600 to $2,000 for payments made after 31 December 2025. Section 70433 of the Act moved three provisions together: section 6041, section 6041A on remuneration for services, and the backup withholding rule in section 3406. It did not touch every reporting rule sitting underneath them.<\/p>\n<h3 id=\"what-moved-to-2000\">What moved to $2,000<\/h3>\n<p>Three commonly used amounts moved. Nonemployee compensation in box 1a of Form 1099-NEC now reports at $2,000 or more. Rents in box 1 of Form 1099-MISC moved to $2,000, and so did medical and health care payments.<\/p>\n<p>The backup withholding trigger in section 3406 moved with them. So 24% withholding on a payee with no valid taxpayer identification number now starts at $2,000 rather than $600.<\/p>\n<h3 id=\"what-stayed-where-it-was\">What stayed where it was<\/h3>\n<p>Gross proceeds paid to an attorney stayed at $600. Royalties stayed at $10. The direct sales checkbox stayed at $5,000. None of these follow the general threshold, and none of them were amended.<\/p>\n<table>\n<thead>\n<tr>\n<th>Payment type<\/th>\n<th>Tax year 2025<\/th>\n<th>Tax year 2026<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Nonemployee compensation (1099-NEC box 1a)<\/td>\n<td>$600<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td>Rents (1099-MISC box 1)<\/td>\n<td>$600<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td>Medical and health care payments<\/td>\n<td>$600<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td>Gross proceeds paid to an attorney<\/td>\n<td>$600<\/td>\n<td>$600<\/td>\n<\/tr>\n<tr>\n<td>Royalties<\/td>\n<td>$10<\/td>\n<td>$10<\/td>\n<\/tr>\n<tr>\n<td>Direct sales checkbox<\/td>\n<td>$5,000<\/td>\n<td>$5,000<\/td>\n<\/tr>\n<tr>\n<td>Backup withholding trigger<\/td>\n<td>$600<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>From 2027 the $2,000 figure is adjusted for inflation each year. Section 6041(h) of the Internal Revenue Code applies the cost-of-living adjustment in section 1(f)(3), using calendar year 2025 as the base, and rounds any increase to the nearest $100.<\/p>\n<p>Two things follow from that. The number will drift upward, so it needs checking each year rather than memorising once. And because sections 3406 and 6041A now cross-reference &#8220;the dollar amount in effect for such calendar year under section 6041(a)&#8221; rather than naming their own figures, the backup withholding trigger and the services-remuneration threshold move automatically with it. One number to track, not three.<\/p>\n<h3 id=\"why-one-filter-across-the-vendor-list-will-under-file\">Why one filter across the vendor list will under-file<\/h3>\n<p>A single $2,000 filter run across the whole accounts payable ledger will under-file. It misses the law firm your client paid $1,400 in settlement proceeds, which is reportable in box 10 of Form 1099-MISC at $600. It misses the $300 royalty. Run the threshold test per payment type, not once across the file.<\/p>\n<p>One point to pass on to the client, because they will ask. A vendor who receives no 1099 still owes tax on the money. The threshold governs whether a form is issued, not whether income is taxable. A contractor paid $1,700 in 2026 gets no Form 1099-NEC and still reports $1,700.<\/p>\n\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"sa-ig-thresh1099\" style=\"margin:2rem 0;max-width:860px;\">\n<style>\n.sa-ig-thresh1099, .sa-ig-thresh1099 *, .sa-ig-thresh1099 *::before, .sa-ig-thresh1099 *::after { margin: 0; padding: 0; box-sizing: border-box; }\n.sa-ig-thresh1099 { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; }\n.sa-ig-thresh1099 .infographic { max-width: 860px; margin: 0 auto; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; background: #ffffff; }\n.sa-ig-thresh1099 .title-bar { background: #2941ba; color: #ffffff; padding: 20px 24px; font-size: 20px; font-weight: 700; text-align: center; }\n.sa-ig-thresh1099 .content { padding: 24px; }\n.sa-ig-thresh1099 .table-wrap { overflow-x: auto; }\n.sa-ig-thresh1099 table { width: 100%; border-collapse: collapse; font-size: 14px; }\n.sa-ig-thresh1099 thead th { background: #1b2a8a; color: #ffffff; font-weight: 700; text-align: left; padding: 12px 14px; font-size: 13.5px; }\n.sa-ig-thresh1099 thead th:last-child { background: #feae2d; color: #212121; }\n.sa-ig-thresh1099 tbody td { padding: 12px 14px; vertical-align: top; line-height: 1.5; border-top: 1px solid #e0e0e0; }\n.sa-ig-thresh1099 tbody tr:nth-child(even) { background: #f5f5f5; }\n.sa-ig-thresh1099 tbody td:first-child { font-weight: 700; color: #1b2a8a; }\n.sa-ig-thresh1099 tbody td:last-child { color: #7a3b1e; font-weight: 600; }\n.sa-ig-thresh1099 tbody tr.unchanged td:nth-child(3) { color: #7a3b1e; font-weight: 700; }\n.sa-ig-thresh1099 .footnote { margin-top: 16px; padding: 12px 14px; background: #eef1fb; border-left: 4px solid #2941ba; font-size: 13px; line-height: 1.55; color: #333333; border-radius: 0 6px 6px 0; }\n.sa-ig-thresh1099 .branding { text-align: right; padding: 12px 24px; font-size: 12px; color: #9e9e9e; border-top: 1px solid #e0e0e0; }\n@media (max-width: 640px) {\n  .sa-ig-thresh1099 .title-bar { font-size: 16px; padding: 16px; }\n  .sa-ig-thresh1099 .content { padding: 16px; }\n  .sa-ig-thresh1099 table, .sa-ig-thresh1099 thead, .sa-ig-thresh1099 tbody, .sa-ig-thresh1099 tr, .sa-ig-thresh1099 td { display: block; width: 100%; }\n  .sa-ig-thresh1099 thead { display: none; }\n  .sa-ig-thresh1099 tbody tr { margin-bottom: 16px; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; background: #ffffff; }\n  .sa-ig-thresh1099 tbody tr:nth-child(even) { background: #ffffff; }\n  .sa-ig-thresh1099 tbody td { border-top: none; padding: 10px 14px; }\n  .sa-ig-thresh1099 tbody td:first-child { background: #2941ba; color: #ffffff; font-size: 15px; padding: 12px 14px; white-space: normal; }\n  .sa-ig-thresh1099 tbody td:not(:first-child)::before { content: attr(data-label); display: block; font-weight: 700; color: #b5760f; font-size: 11px; text-transform: uppercase; letter-spacing: 0.04em; margin-bottom: 2px; }\n  .sa-ig-thresh1099 tbody td:not(:last-child):not(:first-child) { border-bottom: 1px solid #f0f0f0; }\n}\n<\/style>\n  <div class=\"infographic\">\n    <div class=\"title-bar\">1099 reporting thresholds: tax year 2025 vs tax year 2026<\/div>\n    <div class=\"content\">\n      <div class=\"table-wrap\">\n        <table>\n          <thead>\n            <tr>\n              <th>Payment type<\/th>\n              <th>Tax year 2025<\/th>\n              <th>Tax year 2026<\/th>\n              <th>What it means for the filer<\/th>\n            <\/tr>\n          <\/thead>\n          <tbody>\n            <tr>\n              <td data-label=\"Payment type\">Nonemployee compensation (1099-NEC box 1a)<\/td>\n              <td data-label=\"Tax year 2025\">$600<\/td>\n              <td data-label=\"Tax year 2026\">$2,000<\/td>\n              <td data-label=\"What it means\">Fewer forms. Most small contractor payments drop out.<\/td>\n            <\/tr>\n            <tr>\n              <td data-label=\"Payment type\">Rents (1099-MISC box 1)<\/td>\n              <td data-label=\"Tax year 2025\">$600<\/td>\n              <td data-label=\"Tax year 2026\">$2,000<\/td>\n              <td data-label=\"What it means\">Small equipment and short-term rentals drop out.<\/td>\n            <\/tr>\n            <tr>\n              <td data-label=\"Payment type\">Medical and health care payments<\/td>\n              <td data-label=\"Tax year 2025\">$600<\/td>\n              <td data-label=\"Tax year 2026\">$2,000<\/td>\n              <td data-label=\"What it means\">Still reportable to corporations once over the line.<\/td>\n            <\/tr>\n            <tr class=\"unchanged\">\n              <td data-label=\"Payment type\">Gross proceeds to an attorney (1099-MISC box 10)<\/td>\n              <td data-label=\"Tax year 2025\">$600<\/td>\n              <td data-label=\"Tax year 2026\">$600, unchanged<\/td>\n              <td data-label=\"What it means\">A flat $2,000 filter will miss these. Test separately.<\/td>\n            <\/tr>\n            <tr class=\"unchanged\">\n              <td data-label=\"Payment type\">Royalties<\/td>\n              <td data-label=\"Tax year 2025\">$10<\/td>\n              <td data-label=\"Tax year 2026\">$10, unchanged<\/td>\n              <td data-label=\"What it means\">The lowest threshold on the form. Easy to overlook.<\/td>\n            <\/tr>\n            <tr class=\"unchanged\">\n              <td data-label=\"Payment type\">Direct sales checkbox<\/td>\n              <td data-label=\"Tax year 2025\">$5,000<\/td>\n              <td data-label=\"Tax year 2026\">$5,000, unchanged<\/td>\n              <td data-label=\"What it means\">A checkbox, not a dollar amount in a box.<\/td>\n            <\/tr>\n            <tr>\n              <td data-label=\"Payment type\">Backup withholding trigger (24%)<\/td>\n              <td data-label=\"Tax year 2025\">$600<\/td>\n              <td data-label=\"Tax year 2026\">$2,000<\/td>\n              <td data-label=\"What it means\">Withholding starts later, but a missing W-9 still forces a form.<\/td>\n            <\/tr>\n            <tr>\n              <td data-label=\"Payment type\">1099-K, third-party network<\/td>\n              <td data-label=\"Tax year 2025\">Phase-in figures<\/td>\n              <td data-label=\"Tax year 2026\">Over $20,000 AND over 200 transactions<\/td>\n              <td data-label=\"What it means\">Both tests must be met. Restored to the pre-2022 level.<\/td>\n            <\/tr>\n            <tr>\n              <td data-label=\"Payment type\">1099-K, payment card<\/td>\n              <td data-label=\"Tax year 2025\">No minimum<\/td>\n              <td data-label=\"Tax year 2026\">No minimum<\/td>\n              <td data-label=\"What it means\">Every card transaction is inside the 1099-K system.<\/td>\n            <\/tr>\n          <\/tbody>\n        <\/table>\n      <\/div>\n      <div class=\"footnote\">The $2,000 figure is adjusted for inflation from 2027 under section 6041(h), using the section 1(f)(3) cost-of-living adjustment with calendar year 2025 as the base and rounding any increase to the nearest $100, so it will need rechecking each year. Note that three thresholds did not move at all: run the test per payment type rather than once across the whole ledger.<\/div>\n    <\/div>\n    <div class=\"branding\">SkillArbitrage<\/div>\n  <\/div>\n<\/div>\n<\/figure>\n\n<h2 id=\"h2-3\">1099-NEC vs 1099-K: the payment method decides<\/h2>\n<p>Choosing between Form 1099-NEC and Form 1099-K is decided by how the money moved, not by who received it. Bookkeepers get this wrong more often than any other 1099 rule. It has nothing to do with the amount or the vendor type, only with the payment rail.<\/p>\n<h3 id=\"the-rule\">The rule<\/h3>\n<p>Payments made with a credit card or payment card, and certain other payments including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W, and are not subject to reporting on Form 1099-MISC or Form 1099-NEC. That is the IRS instruction wording. The processor reports those payments. The payer does not.<\/p>\n<h3 id=\"which-rail-sends-which-form\">Which rail sends which form<\/h3>\n<table>\n<thead>\n<tr>\n<th>How the client paid<\/th>\n<th>Who reports it<\/th>\n<th>On which form<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Cash, cheque, ACH, bank transfer, wire<\/td>\n<td>The client (payer)<\/td>\n<td>1099-NEC or 1099-MISC<\/td>\n<\/tr>\n<tr>\n<td>Business credit card or debit card<\/td>\n<td>The merchant acquiring entity<\/td>\n<td>1099-K, no minimum amount<\/td>\n<\/tr>\n<tr>\n<td>Card payments processed by Stripe or Square<\/td>\n<td>The merchant acquiring entity<\/td>\n<td>1099-K, no minimum amount<\/td>\n<\/tr>\n<tr>\n<td>PayPal or Venmo business balance transfers<\/td>\n<td>The third-party settlement organisation<\/td>\n<td>1099-K, above $20,000 and 200 transactions<\/td>\n<\/tr>\n<tr>\n<td>Bill.com or similar, paid by card rail<\/td>\n<td>The processor<\/td>\n<td>1099-K<\/td>\n<\/tr>\n<tr>\n<td>Bill.com or similar, paid by ACH rail<\/td>\n<td>The client (payer)<\/td>\n<td>1099-NEC<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Two details in that table catch people out. Payment card transactions have no minimum threshold at all, so a single $40 card payment is inside the 1099-K system. The de minimis exception in section 6050W(e) is written only for a third-party settlement organisation handling third-party network transactions, and card transactions are defined separately, so the exception never reaches them.<\/p>\n<p>Third-party network transactions do have a threshold, and for tax year 2026 it is more than $20,000 <strong>and<\/strong> more than 200 transactions, both conditions together, restored by the same 2025 Act to the level that applied before 2022. Note that Stripe and Square usually sit on the card side rather than the network side, so grouping all four platforms together is a common shorthand that gets the reason wrong even when it gets the answer right.<\/p>\n<h3 id=\"one-vendor-three-rails\">One vendor, three rails<\/h3>\n<p>A US client paid a freelance designer $9,400 across calendar year 2026. The payments break down as follows.<\/p>\n<ul>\n<li>$5,200 by ACH from the operating account<\/li>\n<li>$3,000 on the company credit card<\/li>\n<li>$1,200 through PayPal<\/li>\n<\/ul>\n<p>The Form 1099-NEC reports <strong>$5,200<\/strong>, not $9,400. The card and PayPal payments belong to their processors. The card processor reports its $3,000 on a 1099-K regardless of size.<\/p>\n<p>PayPal reports nothing, because $1,200 is nowhere near $20,000 and 200 transactions, so no form is required from anyone for that slice. The designer still owes tax on all $9,400.<\/p>\n<p>Filing the full $9,400 creates a visible problem. The IRS then sees $9,400 from your client plus $3,000 from the card processor against the same taxpayer identification number. The designer appears to have earned $12,400. They receive a matching notice, they call your client, and your client calls you.<\/p>\n<h3 id=\"what-quickbooks-online-does-automatically\">What QuickBooks Online does automatically<\/h3>\n<p>QuickBooks Online applies this rule automatically. Once a vendor is flagged as a contractor tracked for 1099s, QBO accumulates their payments and excludes anything paid by credit card, debit card, or a third-party system such as PayPal, because the financial institution reports those instead.<\/p>\n<p>What drives that exclusion is not what most people assume. Selecting &#8220;Credit Card&#8221; in the payment method field on an expense does <strong>not<\/strong> exclude the payment from the 1099 reports. QuickBooks looks at the account: to exclude the payment you have to post the expense against a credit card account from the chart of accounts. QuickBooks Online also accepts text such as &#8220;Debit&#8221; or &#8220;PayPal&#8221; in the Ref or Check number field as an exclusion marker.<\/p>\n<p>So the failure runs in both directions. A contractor paid entirely by card will not appear in the 1099 flow at all, which is correct, but it looks like an omission and gets &#8220;fixed&#8221; by whoever does not know the rule. More dangerously, a genuine card payment entered against a bank account, with the payment method dropdown set to Credit Card, stays in the 1099 total and quietly overstates the vendor. Reconcile the account used, not the label on the transaction, and do it mid-year rather than in January.<\/p>\n\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"sa-ig-rails1099\" style=\"margin:2rem 0;max-width:860px;\">\n<style>\n.sa-ig-rails1099, .sa-ig-rails1099 *, .sa-ig-rails1099 *::before, .sa-ig-rails1099 *::after { margin: 0; padding: 0; box-sizing: border-box; }\n.sa-ig-rails1099 { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; }\n.sa-ig-rails1099 .infographic { max-width: 860px; margin: 0 auto; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; background: #ffffff; }\n.sa-ig-rails1099 .title-bar { background: #2941ba; color: #ffffff; padding: 20px 24px; font-size: 20px; font-weight: 700; text-align: center; }\n.sa-ig-rails1099 .subtitle { background: #eef1fb; color: #1b2a8a; padding: 12px 24px; font-size: 14px; font-weight: 600; text-align: center; border-bottom: 1px solid #dde3f7; }\n.sa-ig-rails1099 .content { padding: 24px; }\n.sa-ig-rails1099 .lane { border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; margin-bottom: 16px; }\n.sa-ig-rails1099 .lane:last-of-type { margin-bottom: 0; }\n.sa-ig-rails1099 .lane-head { padding: 12px 16px; font-size: 15px; font-weight: 700; color: #ffffff; }\n.sa-ig-rails1099 .lane-a .lane-head { background: #1b2a8a; }\n.sa-ig-rails1099 .lane-b .lane-head { background: #b5760f; }\n.sa-ig-rails1099 .lane-c .lane-head { background: #4a5568; }\n.sa-ig-rails1099 .lane-body { padding: 14px 16px; }\n.sa-ig-rails1099 .rails { font-size: 13.5px; line-height: 1.6; color: #333333; margin-bottom: 10px; }\n.sa-ig-rails1099 .rails strong { color: #1b2a8a; }\n.sa-ig-rails1099 .verdict { font-size: 14px; font-weight: 700; padding: 10px 12px; border-radius: 6px; background: #f5f5f5; color: #212121; line-height: 1.5; }\n.sa-ig-rails1099 .lane-a .verdict { background: #eef1fb; color: #1b2a8a; }\n.sa-ig-rails1099 .lane-b .verdict { background: #fdf3e0; color: #7a3b1e; }\n.sa-ig-rails1099 .lane-c .verdict { background: #f0f2f5; color: #3a4351; }\n.sa-ig-rails1099 .example { margin-top: 18px; border: 1px dashed #2941ba; border-radius: 8px; padding: 14px 16px; background: #fbfcff; }\n.sa-ig-rails1099 .example h4 { font-size: 14px; color: #1b2a8a; margin-bottom: 8px; font-weight: 700; }\n.sa-ig-rails1099 .example ul { list-style: none; }\n.sa-ig-rails1099 .example li { font-size: 13.5px; line-height: 1.7; color: #333333; padding-left: 16px; position: relative; }\n.sa-ig-rails1099 .example li::before { content: \"\"; position: absolute; left: 0; top: 10px; width: 6px; height: 6px; border-radius: 50%; background: #feae2d; }\n.sa-ig-rails1099 .example .total { margin-top: 10px; padding-top: 10px; border-top: 1px solid #dde3f7; font-size: 14px; font-weight: 700; color: #1b2a8a; }\n.sa-ig-rails1099 .footnote { margin-top: 16px; padding: 12px 14px; background: #eef1fb; border-left: 4px solid #2941ba; font-size: 13px; line-height: 1.55; color: #333333; border-radius: 0 6px 6px 0; }\n.sa-ig-rails1099 .branding { text-align: right; padding: 12px 24px; font-size: 12px; color: #9e9e9e; border-top: 1px solid #e0e0e0; }\n@media (max-width: 640px) {\n  .sa-ig-rails1099 .title-bar { font-size: 16px; padding: 16px; }\n  .sa-ig-rails1099 .subtitle { font-size: 13px; padding: 10px 16px; }\n  .sa-ig-rails1099 .content { padding: 16px; }\n}\n<\/style>\n  <div class=\"infographic\">\n    <div class=\"title-bar\">1099-NEC or 1099-K? Follow the payment rail<\/div>\n    <div class=\"subtitle\">The form is decided by how the client paid, not by who they paid or how much.<\/div>\n    <div class=\"content\">\n\n      <div class=\"lane lane-a\">\n        <div class=\"lane-head\">1. Paid straight from the client&#8217;s own funds<\/div>\n        <div class=\"lane-body\">\n          <div class=\"rails\"><strong>Cash, cheque, ACH, bank transfer, wire.<\/strong> Also a bill-payment platform when the payment settles on the ACH rail.<\/div>\n          <div class=\"verdict\">The client reports it. Form 1099-NEC at $2,000, or Form 1099-MISC for rents and attorney proceeds.<\/div>\n        <\/div>\n      <\/div>\n\n      <div class=\"lane lane-b\">\n        <div class=\"lane-head\">2. Paid by payment card<\/div>\n        <div class=\"lane-body\">\n          <div class=\"rails\"><strong>Business credit card, debit card.<\/strong> Also a bill-payment platform when the payment settles on a card rail.<\/div>\n          <div class=\"verdict\">The card processor reports it on Form 1099-K. No minimum amount at all. The client files nothing for these.<\/div>\n        <\/div>\n      <\/div>\n\n      <div class=\"lane lane-c\">\n        <div class=\"lane-head\">3. Paid through a third-party network<\/div>\n        <div class=\"lane-body\">\n          <div class=\"rails\"><strong>PayPal, Venmo business, Stripe, Square.<\/strong><\/div>\n          <div class=\"verdict\">The settlement organisation reports it on Form 1099-K, but only above $20,000 AND above 200 transactions. Below that, nobody files. The client still files nothing.<\/div>\n        <\/div>\n      <\/div>\n\n      <div class=\"example\">\n        <h4>Worked example: one designer, $9,400, three rails<\/h4>\n        <ul>\n          <li>$5,200 by ACH from the operating account<\/li>\n          <li>$3,000 on the company credit card<\/li>\n          <li>$1,200 through PayPal<\/li>\n        <\/ul>\n        <div class=\"total\">The client&#8217;s Form 1099-NEC reports $5,200, not $9,400. Reporting the full amount double-counts the card payments and triggers a matching notice against the designer.<\/div>\n      <\/div>\n\n      <div class=\"footnote\">In QuickBooks Online the exclusion is driven by the account the expense is posted to, not by the payment method dropdown. Selecting &#8220;Credit Card&#8221; as the payment method does not remove a payment from the 1099 reports; posting it against a credit card account does.<\/div>\n    <\/div>\n    <div class=\"branding\">SkillArbitrage<\/div>\n  <\/div>\n<\/div>\n<\/figure>\n\n<h2 id=\"h2-4\">Which vendors get a 1099<\/h2>\n<p>Whether a vendor gets a 1099 is answered by their Form W-9, specifically line 3a. That form is the evidence for the decision and the reason to collect it before the first payment rather than after the last one.<\/p>\n<h3 id=\"reading-line-3a-of-the-w-9\">Reading line 3a of the W-9<\/h3>\n<p>Line 3a carries seven tick boxes for federal tax classification, and the vendor picks exactly one: individual or sole proprietor, C corporation, S corporation, partnership, trust or estate, LLC, or other. Payments to a corporation are generally not reportable. Payments to a sole proprietor or a partnership are.<\/p>\n<p>The LLC box on its own tells you nothing, because it comes with a letter beside it. C or S means the LLC elected corporate treatment and is exempt. P means it is taxed as a partnership and is reportable. Read the letter, not the box.<\/p>\n<p>Now the case that catches almost everyone. A single-member LLC that made no corporate election is a disregarded entity, and it does <strong>not<\/strong> tick the LLC box at all. The W-9 instructions tell a disregarded entity to tick the box for its owner&#8217;s classification instead, so an SMLLC owned by an individual arrives showing &#8220;individual or sole proprietor&#8221;.<\/p>\n<p>That vendor is reportable. A bookkeeper who filters on the LLC box will systematically miss exactly these vendors, and they are common among freelancers.<\/p>\n<p>If line 3a is blank, or the classification contradicts the entity name on line 1, send the form back before you pay.<\/p>\n<h3 id=\"the-exceptions-that-override-the-corporate-exemption\">The exceptions that override the corporate exemption<\/h3>\n<p>Some payments are reportable even when the recipient is a corporation, and the list is longer than the usual three.<\/p>\n<p>On Form 1099-MISC: cash payments for the purchase of fish for resale (box 11, $600), medical and health care payments (box 6, $2,000), substitute payments in lieu of dividends or tax-exempt interest (box 8), and gross proceeds paid to an attorney (box 10, $600).<\/p>\n<p>On Form 1099-NEC: attorneys&#8217; fees (box 1a, $2,000) and payments by a federal executive agency for services (box 1a).<\/p>\n<p>Note that the thresholds diverge inside that list, so there is no single number to apply. Attorneys&#8217; fees and medical payments sit at $2,000, while gross proceeds to an attorney and fish for resale stayed at $600.<\/p>\n<p>The attorney exception is the one most likely to appear in an ordinary set of books. A law firm is almost always incorporated, and a bookkeeper who applies the corporate exemption mechanically will skip it.<\/p>\n<p>Attorney fees for services go in box 1a of Form 1099-NEC at $2,000. Gross proceeds paid to an attorney, which covers settlement money passing through a firm&#8217;s trust account, go in box 10 of Form 1099-MISC at $600. Two different forms, two different thresholds, same law firm.<\/p>\n<h3 id=\"employee-or-contractor-comes-first\">Employee or contractor comes first<\/h3>\n<p>Before any of this, the worker has to actually be a contractor. If the client controls how, when, and where the work is done, the relationship may be employment, and the correct form is a W-2 with payroll tax on top. Misclassification is a payroll problem, not a 1099 problem, and issuing a 1099-NEC does not fix it.<\/p>\n<p>The underlying distinction is not unique to US law. Indian practitioners will recognise it as <a href=\"https:\/\/blog.ipleaders.in\/contract-of-service-and-contract-for-service\/\" target=\"_blank\" rel=\"noopener\">the difference between a contract of service and a contract for service<\/a>, which turns on the same control test. The label on the invoice does not decide it, and neither does the vendor&#8217;s preference. If a client&#8217;s &#8220;contractor&#8221; works fixed hours on client equipment under client supervision, raise it before year end, not during it.<\/p>\n<h2 id=\"h2-5\">New boxes on the 2026 Form 1099-NEC<\/h2>\n<p>The 2026 Form 1099-NEC has new boxes that did not exist on the 2025 version, and they exist because of the tips and overtime deductions created by the 2025 Act. If you are only capturing a single compensation total per contractor, you may not have the data these boxes want.<\/p>\n<h3 id=\"what-each-new-box-holds\">What each new box holds<\/h3>\n<p>Box 1b takes cash tips, meaning tips paid in cash or charged by customers.<\/p>\n<p>Box 1c takes the Treasury tipped occupation code, and up to two codes may be entered. If the payee earned tips in three or more occupations, enter any two of them. If any tips came from a non-qualifying occupation, one of the codes entered must be &#8220;000&#8221;. The code list is published at IRS.gov\/TTOC.<\/p>\n<p>Box 1d takes qualified overtime compensation, using the section 7 definition in the Fair Labor Standards Act. Read this one carefully, because it is not the whole overtime payment. It is only the amount paid above the regular rate, so on time-and-a-half it is the &#8220;half&#8221; and not the &#8220;time-and-a-half&#8221;.<\/p>\n<p>Box 3 now holds excess golden parachute payments, which moved across from Form 1099-MISC.<\/p>\n<h3 id=\"what-changed-on-form-1099-misc\">What changed on Form 1099-MISC<\/h3>\n<p>Form 1099-MISC gained parallel boxes, and its renumbering is the more dangerous of the two. Box 13a now takes cash tips and box 13b the occupation code, box 14 takes overtime compensation, and the FATCA filing requirement checkbox lost its number entirely.<\/p>\n<p>Box 14 is the trap. On the 2025 form it held excess golden parachute payments. On the 2026 form it holds overtime compensation, a completely different item. Anyone carrying forward last year&#8217;s box map will misfile.<\/p>\n<p>One more difference worth holding on to: on Form 1099-MISC, boxes 13a and 14 are subsets of box 3, other income, not of box 1.<\/p>\n<h3 id=\"boxes-1b-and-1d-sit-inside-box-1a\">Boxes 1b and 1d sit inside box 1a<\/h3>\n<p>Amounts in boxes 1b and 1d stay inside the box 1a total. They break the total down, they do not add to it. Reporting $40,000 in box 1a and $6,000 in box 1d means $6,000 of that $40,000 was overtime premium, not that the vendor received $46,000.<\/p>\n<p>This is not merely tidy practice. When the IRS granted transitional relief on this reporting for tax year 2025, it conditioned the relief on the tips and overtime still being included in the aggregate total. The breakdown has to reconcile to box 1a.<\/p>\n<h3 id=\"what-to-start-capturing-now\">What to start capturing now<\/h3>\n<p>If a client pays contractors in a tipped occupation, or pays overtime to any worker who receives a 1099-NEC rather than a W-2, the ledger needs those amounts separated during the year. Reconstructing a tip and overtime split in January from a single lump-sum expense account is slow and usually approximate, and approximate is not a good basis for a form that feeds someone&#8217;s deduction.<\/p>\n<p>Do not count on penalty relief for getting this wrong. IRS Notice 2025-62 waived the section 6721 and 6722 penalties for omitting the separate tips, occupation code and overtime figures, but it says the relief &#8220;applies only for taxable year 2025&#8221;. Its stated reason was that the 2025 forms were never updated to carry those boxes. The 2026 forms do carry them, so the reason no longer holds and no equivalent relief has been issued for tax year 2026.<\/p>\n<p>The forms themselves are settled. The December 2026 revisions of Form 1099-NEC, Form 1099-MISC and their instructions are final and published, not drafts, and the instructions say to use them to file 2026 information in early 2027. They are continuous-use revisions, so they stay in force for later years too until the IRS issues a superseding revision. What to check before filing is whether a superseding revision has appeared, not whether the box numbers have settled.<\/p>\n<h2 id=\"h2-6\">The year-end 1099 workflow for bookkeepers<\/h2>\n<p>The year-end 1099 workflow starts in February, not December. Nine steps, anchored to when they actually have to happen.<\/p>\n<p><strong>Step 1. Collect the W-9 before the first payment.<\/strong> Not at year end. A vendor who has been paid has no reason to hurry, and a vendor who has stopped working with the client may not answer at all. Make an on-file W-9 a condition of vendor setup in the accounting system, and refuse to release the first payment without it.<\/p>\n<p><strong>Step 2. Run TIN Matching before you rely on the number.<\/strong> The IRS TIN Matching service, available through e-Services, checks a name and taxpayer identification number pair against IRS records for Forms 1099-B, DA, DIV, G, INT, K, MISC, NEC, OID and PATR. Checking in March costs nothing. Discovering a mismatch after filing costs two corrected returns.<\/p>\n<p>Most mismatches have the same cause: the vendor&#8217;s trading name went on the form instead of the legal name attached to the tax number. A sole proprietor who trades as &#8220;Northside Design&#8221; but files under their own name will fail the match every time. Use line 1 of the W-9, not the invoice letterhead.<\/p>\n<p>Matching before you file is also what keeps CP2100 notices away. The IRS says payers who validate name and number combinations first receive fewer backup withholding notices and fewer penalty notices, and a CP2100 lands on the client months later with B-notice obligations attached.<\/p>\n<p><strong>Step 3. Post every payment to the account it actually came from.<\/strong> This is the step that decides the NEC and K split, and it is the one most often done carelessly. Card payments belong against a card account, ACH against the bank account, and the payment method label is not a substitute for either. Build it into the bank feed rules rather than relying on memory.<\/p>\n<p><strong>Step 4. Change the threshold in the software itself.<\/strong> Most bookkeeping and payroll systems ship with a $600 trigger that flags contractors for 1099 issuance. That trigger has to move to $2,000, and only for 2026 payments. Anything paid in 2025 still belongs to the old rule, so if the software applies one figure across both years, one of the two years will be wrong.<\/p>\n<p><strong>Step 5. Review vendors against the thresholds quarterly.<\/strong> A quarterly pass catches the vendor who crossed $2,000 in May, the vendor with no W-9 who is about to trigger backup withholding, and the attorney payment sitting under the $600 line that a $2,000 filter would hide. Quarterly also spreads the work across the year instead of stacking it in January, which matters if you bill by retainer. This is ordinary hygiene, the same discipline behind competent <a href=\"https:\/\/skillarbitra.ge\/blog\/master-bookkeeping-for-small-businesses-in-the-us\/\" target=\"_blank\" rel=\"noopener\">bookkeeping for US small businesses<\/a>.<\/p>\n<p><strong>Step 6. Sort out the filing channel in October.<\/strong> For tax year 2026 this is not routine, because the electronic filing system is changing. Section seven covers what has to happen and by when.<\/p>\n<p><strong>Step 7. Freeze and reconcile in December.<\/strong> Close the vendor list, reconcile 1099-eligible payments to the general ledger, and produce a draft list with amounts and the reason each vendor is in or out. Chase the last missing W-9s here, while there is still time to withhold on a final payment if one is due.<\/p>\n<p><strong>Step 8. Draft, review with the client, furnish in January.<\/strong> Send the client the draft list before generating forms. They know things the ledger does not, such as which vendor incorporated in August or which payment was a reimbursement rather than a fee. Then furnish recipient copies.<\/p>\n<p>How you furnish them matters more than it looks. Emailing a 1099 is not automatically valid delivery. To furnish electronically you need the recipient&#8217;s consent first, and the IRS is specific about it: the recipient &#8220;must consent in the affirmative and not have withdrawn the consent before the statement is furnished&#8221;, and that consent &#8220;must be made electronically in a way that shows that she or he can access the statement in the electronic format in which it will be furnished&#8221;. Before you send anything you also have to tell them that a paper copy is available if they decline, how to get one later, how to withdraw consent, and what hardware and software they will need.<\/p>\n<p>Get that wrong and the statement was never validly furnished, which is the section 6722 penalty in the next section rather than a filing question. A vendor who never clicked consent needs paper.<\/p>\n<p><strong>Step 9. File, then archive the proof.<\/strong> Keep the accepted filing confirmation, the vendor list as filed, and every W-9. If a penalty notice arrives eighteen months later, that file is the entire defence.<\/p>\n<h3 id=\"filtering-a-vendor-list\">Filtering a vendor list<\/h3>\n<p>A client&#8217;s 2026 accounts payable ledger has six vendors. Applying the rules above:<\/p>\n<table>\n<thead>\n<tr>\n<th>Vendor<\/th>\n<th>Paid<\/th>\n<th>How<\/th>\n<th>W-9 says<\/th>\n<th>Outcome<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Freelance copywriter<\/td>\n<td>$4,100<\/td>\n<td>ACH<\/td>\n<td>Sole proprietor<\/td>\n<td>1099-NEC, box 1a, $4,100<\/td>\n<\/tr>\n<tr>\n<td>Web development firm<\/td>\n<td>$22,000<\/td>\n<td>ACH<\/td>\n<td>S corporation<\/td>\n<td>No form, corporate exemption<\/td>\n<\/tr>\n<tr>\n<td>Freelance designer<\/td>\n<td>$1,700<\/td>\n<td>ACH<\/td>\n<td>Sole proprietor<\/td>\n<td>No form, under $2,000<\/td>\n<\/tr>\n<tr>\n<td>Law firm (settlement proceeds)<\/td>\n<td>$1,400<\/td>\n<td>Cheque<\/td>\n<td>C corporation<\/td>\n<td>1099-MISC, box 10, $1,400<\/td>\n<\/tr>\n<tr>\n<td>Virtual assistant<\/td>\n<td>$6,800<\/td>\n<td>Company card<\/td>\n<td>Sole proprietor<\/td>\n<td>No form from client, processor reports<\/td>\n<\/tr>\n<tr>\n<td>Office landlord<\/td>\n<td>$18,000<\/td>\n<td>ACH<\/td>\n<td>Partnership<\/td>\n<td>1099-MISC, box 1, $18,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Three of the six get a form from the client, and they are not the ones a plain &#8220;$2,000 or more&#8221; filter would produce. That filter would have returned four names: the copywriter, the web development firm, the virtual assistant and the landlord. Two of those four are wrong, and the one it misses is wrong in the other direction.<\/p>\n<p>The incorporated law firm is in despite being a corporation and despite being under $2,000. The web development firm is out despite being the largest payment on the list, because it is an S corporation. The virtual assistant is out despite being paid $6,800, because of the rail. Explaining that table to a client line by line is advisory work rather than data entry, which is one of the things that changes <a href=\"https:\/\/skillarbitra.ge\/blog\/bookkeeper-charge-us-clients-remotely\/\" target=\"_blank\" rel=\"noopener\">what you can charge US clients as a remote bookkeeper<\/a>.<\/p>\n\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"sa-ig-cal1099\" style=\"margin:2rem 0;max-width:860px;\">\n<style>\n.sa-ig-cal1099, .sa-ig-cal1099 *, .sa-ig-cal1099 *::before, .sa-ig-cal1099 *::after { margin: 0; padding: 0; box-sizing: border-box; }\n.sa-ig-cal1099 { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; }\n.sa-ig-cal1099 .infographic { max-width: 860px; margin: 0 auto; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; background: #ffffff; }\n.sa-ig-cal1099 .title-bar { background: #2941ba; color: #ffffff; padding: 20px 24px; font-size: 20px; font-weight: 700; text-align: center; }\n.sa-ig-cal1099 .subtitle { background: #eef1fb; color: #1b2a8a; padding: 12px 24px; font-size: 14px; font-weight: 600; text-align: center; border-bottom: 1px solid #dde3f7; }\n.sa-ig-cal1099 .content { padding: 24px; }\n.sa-ig-cal1099 .step { display: flex; gap: 14px; padding: 14px 0; border-bottom: 1px solid #eeeeee; }\n.sa-ig-cal1099 .step:last-child { border-bottom: none; }\n.sa-ig-cal1099 .when { flex: 0 0 92px; }\n.sa-ig-cal1099 .when span { display: inline-block; background: #1b2a8a; color: #ffffff; font-size: 11.5px; font-weight: 700; padding: 5px 9px; border-radius: 4px; text-transform: uppercase; letter-spacing: 0.03em; }\n.sa-ig-cal1099 .step.hot .when span { background: #b5760f; }\n.sa-ig-cal1099 .step.due .when span { background: #a02020; }\n.sa-ig-cal1099 .what { flex: 1 1 auto; }\n.sa-ig-cal1099 .what h4 { font-size: 14.5px; font-weight: 700; color: #1b2a8a; margin-bottom: 4px; }\n.sa-ig-cal1099 .step.hot .what h4 { color: #7a3b1e; }\n.sa-ig-cal1099 .step.due .what h4 { color: #a02020; }\n.sa-ig-cal1099 .what p { font-size: 13.5px; line-height: 1.6; color: #444444; }\n.sa-ig-cal1099 .num { flex: 0 0 26px; height: 26px; border-radius: 50%; background: #feae2d; color: #212121; font-size: 13px; font-weight: 700; display: flex; align-items: center; justify-content: center; }\n.sa-ig-cal1099 .footnote { margin-top: 16px; padding: 12px 14px; background: #eef1fb; border-left: 4px solid #2941ba; font-size: 13px; line-height: 1.55; color: #333333; border-radius: 0 6px 6px 0; }\n.sa-ig-cal1099 .branding { text-align: right; padding: 12px 24px; font-size: 12px; color: #9e9e9e; border-top: 1px solid #e0e0e0; }\n@media (max-width: 640px) {\n  .sa-ig-cal1099 .title-bar { font-size: 16px; padding: 16px; }\n  .sa-ig-cal1099 .subtitle { font-size: 13px; padding: 10px 16px; }\n  .sa-ig-cal1099 .content { padding: 16px; }\n  .sa-ig-cal1099 .step { flex-wrap: wrap; gap: 8px; }\n  .sa-ig-cal1099 .when { flex: 0 0 auto; order: 2; }\n  .sa-ig-cal1099 .num { order: 1; }\n  .sa-ig-cal1099 .what { flex: 1 1 100%; order: 3; }\n}\n<\/style>\n  <div class=\"infographic\">\n    <div class=\"title-bar\">The year-end 1099 workflow, month by month<\/div>\n    <div class=\"subtitle\">Tax year 2026 payments, filed in early 2027. The work starts long before January.<\/div>\n    <div class=\"content\">\n\n      <div class=\"step\">\n        <div class=\"num\">1<\/div>\n        <div class=\"when\"><span>Ongoing<\/span><\/div>\n        <div class=\"what\"><h4>W-9 before the first payment<\/h4><p>Make an on-file Form W-9 a condition of vendor setup. A vendor who has already been paid has no reason to hurry.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step\">\n        <div class=\"num\">2<\/div>\n        <div class=\"when\"><span>Ongoing<\/span><\/div>\n        <div class=\"what\"><h4>TIN Matching through IRS e-Services<\/h4><p>Check the name and number pair before you rely on it. A mismatch found after filing costs two corrected returns.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step\">\n        <div class=\"num\">3<\/div>\n        <div class=\"when\"><span>Every entry<\/span><\/div>\n        <div class=\"what\"><h4>Post payments to the right account<\/h4><p>Card to a card account, ACH to the bank account. This is what decides the 1099-NEC and 1099-K split.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step\">\n        <div class=\"num\">4<\/div>\n        <div class=\"when\"><span>Quarterly<\/span><\/div>\n        <div class=\"what\"><h4>Review vendors against the thresholds<\/h4><p>Catch the vendor who crossed $2,000, the missing W-9 about to trigger withholding, and the attorney payment under $600.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step hot\">\n        <div class=\"num\">5<\/div>\n        <div class=\"when\"><span>October<\/span><\/div>\n        <div class=\"what\"><h4>Sort out the filing channel<\/h4><p>IRIS replaces FIRE for the 2027 filing season and a FIRE transmitter control code does not carry over. Apply early.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step\">\n        <div class=\"num\">6<\/div>\n        <div class=\"when\"><span>December<\/span><\/div>\n        <div class=\"what\"><h4>Freeze and reconcile<\/h4><p>Close the vendor list, reconcile to the general ledger, and chase the last W-9s while a final payment can still be withheld on.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step\">\n        <div class=\"num\">7<\/div>\n        <div class=\"when\"><span>January<\/span><\/div>\n        <div class=\"what\"><h4>Draft, review with the client, furnish<\/h4><p>The client knows which vendor incorporated mid-year and which payment was a reimbursement. Show them the list first.<\/p><\/div>\n      <\/div>\n\n      <div class=\"step due\">\n        <div class=\"num\">8<\/div>\n        <div class=\"when\"><span>1 Feb 2027<\/span><\/div>\n        <div class=\"what\"><h4>File, then archive the proof<\/h4><p>Form 1099-NEC is due to the recipient and the IRS on the same day. Keep the confirmation, the list as filed, and every W-9.<\/p><\/div>\n      <\/div>\n\n      <div class=\"footnote\">There is no automatic extension for Form 1099-NEC. Form 8809 gives an automatic 30 days for most information returns, but not for 1099-NEC and not for W-2. Forms 1099-MISC and 1099-K run a month or two later: 1 March 2027 on paper, 31 March 2027 electronically.<\/div>\n    <\/div>\n    <div class=\"branding\">SkillArbitrage<\/div>\n  <\/div>\n<\/div>\n<\/figure>\n\n<h2 id=\"h2-7\">1099 filing season 2026 deadlines and the end of FIRE<\/h2>\n<p>The 1099 filing season 2026 deadlines fall in early 2027, and the electronic channel used to meet them is being replaced in between. Both need handling now.<\/p>\n<h3 id=\"the-10-return-e-file-threshold\">The 10-return e-file threshold<\/h3>\n<p>Anyone filing 10 or more information returns in a year must file electronically. The count aggregates across form types rather than applying separately to each. Four Forms 1098 and six Forms 1099-A together make ten, and the requirement applies. Most small business clients fall under this once W-2s and 1099s are counted together, so assume electronic filing unless you have counted and confirmed otherwise.<\/p>\n<p>There is one way out, and it is not casual. A hardship waiver is available on Form 8508, but it has to be submitted at least 45 days before the due date, it covers only one tax year at a time, and you have to reapply each year. Filing on paper when you were required to e-file, without an approved waiver, is itself penalised.<\/p>\n<h3 id=\"fire-closes-iris-takes-over\">FIRE closes, IRIS takes over<\/h3>\n<p>The Filing Information Returns Electronically system is being retired, and one deadline has already gone. The IRS stopped accepting new Information Returns Applications for Transmitter Control Codes for FIRE on 21 July 2026.<\/p>\n<p>In its own words, the Information Returns Intake System &#8220;will be the only information returns electronic filing system, including current year, prior year, or corrections, after Jan. 1, 2027&#8221;. Current FIRE users have to complete an IRIS application and move across for the 2027 filing season.<\/p>\n<p>That closed door matters more than it looks. If a client does not already hold a FIRE transmitter control code, there is no longer a route to one, so IRIS is the only option available. If they do hold one, it does not carry over, and a separate IRIS application is still required.<\/p>\n<p>Two further details are easy to miss. Issuance is not instant, so the application needs to be in well before January 2027 rather than alongside the filing. And the IRIS portal and the application-to-application channel take separate TCC applications, so a bookkeeper keying returns by hand needs a different code from one filing through vendor software. IRIS itself is free: the portal handles manual entry or CSV upload of up to 100 returns at a time, and the machine-to-machine channel handles volume.<\/p>\n<h3 id=\"deadlines-for-tax-year-2026-forms\">Deadlines for tax year 2026 forms<\/h3>\n<table>\n<thead>\n<tr>\n<th>Form<\/th>\n<th>To recipient<\/th>\n<th>To IRS on paper<\/th>\n<th>To IRS electronically<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>1099-NEC<\/td>\n<td>1 February 2027<\/td>\n<td>1 February 2027<\/td>\n<td>1 February 2027<\/td>\n<\/tr>\n<tr>\n<td>1099-MISC, no box 8 or 10 amounts<\/td>\n<td>1 February 2027<\/td>\n<td>1 March 2027<\/td>\n<td>31 March 2027<\/td>\n<\/tr>\n<tr>\n<td>1099-MISC with box 8 or 10 amounts<\/td>\n<td>16 February 2027<\/td>\n<td>1 March 2027<\/td>\n<td>31 March 2027<\/td>\n<\/tr>\n<tr>\n<td>1099-K<\/td>\n<td>1 February 2027<\/td>\n<td>1 March 2027<\/td>\n<td>31 March 2027<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Those calendar dates are derived, so here is the working. The IRS instructions state the statutory dates as 31 January, 15 February and 28 February, plus a general rule: if a due date falls on a Saturday, Sunday, or legal holiday in the District of Columbia or where the return is to be filed, it moves to the next day that is none of those.<\/p>\n<p>In 2027, 31 January is a Sunday, 28 February is a Sunday, and 15 February is Presidents&#8217; Day. Each therefore moves forward, which is where 1 February, 16 February and 1 March come from. Confirm them against the IRS instructions before you diary them.<\/p>\n<p>Note that Form 1099-NEC carries the same date for recipient and IRS copies, and that date holds whether you file on paper or electronically. There is no extra month, and there is no automatic extension.<\/p>\n<p>This is where putting contractor payments on the wrong form gets expensive. Nonemployee compensation belongs on the 1099-NEC, not the 1099-MISC, and filing it on a 1099-MISC does not count as having filed. The obligation stays open.<\/p>\n<p>The deadlines make it worse. The 1099-MISC dates are later, so the filer believes they have until 1 March or 31 March when the real deadline was 1 February. By the time anyone notices, the correct return is months late and has moved up a penalty tier.<\/p>\n<p>Form 8809 gives an automatic 30 days for most information returns, but not for Form 1099-NEC and not for Form W-2. For those two, an extension is granted only on request, only once, and only for one of five stated reasons: a catastrophic event in a federally declared disaster area; fire, casualty or natural disaster; the death, serious illness or unavoidable absence of the person responsible for filing; the filer&#8217;s first year of establishment; or failure to receive data on a payee statement in time to prepare an accurate return. Running late is not on the list.<\/p>\n<h3 id=\"where-an-offshore-bookkeepers-scope-ends\">Where an offshore bookkeeper&#8217;s scope ends<\/h3>\n<p>Be explicit with the client about where your scope ends. The forms are filed under the client&#8217;s employer identification number and the client is the filer of record, whatever software you use. A transmitter control code is issued to a business, and applying for one involves identity verification tied to a US responsible official, so in most engagements the code belongs to the client or to their US-based CPA firm rather than to you personally.<\/p>\n<p>What you can do is everything up to the filing itself, and often the filing too, acting on the client&#8217;s account with their authorisation: collect and validate W-9s, run TIN Matching, maintain the payment method coding, produce the draft list, prepare the forms, and manage the calendar. Many remote engagements run exactly this way, with the client or their CPA holding the credentials and pressing submit. Agreeing that split in writing at the start of the engagement avoids a bad conversation in January, and it is the same boundary-setting that makes the difference in <a href=\"https:\/\/skillarbitra.ge\/blog\/us-remote-bookkeeping-job-complete-guide\/\" target=\"_blank\" rel=\"noopener\">a first US remote bookkeeping job<\/a>.<\/p>\n<h2 id=\"h2-8\">State filing, penalties and corrections<\/h2>\n<p>State rules did not move with the federal threshold, and for tax year 2026 that gap is the newest trap in the process.<\/p>\n<h3 id=\"states-that-did-not-follow-the-federal-2000\">States that did not follow the federal $2,000<\/h3>\n<p>California publishes $2,000 for tax year 2026. Its <a href=\"https:\/\/www.ftb.ca.gov\/file\/guide-to-information-returns-filed-with-california.html\" target=\"_blank\" rel=\"noopener\">Guide to Information Returns Filed With California<\/a> gives the 1099-NEC amount as &#8220;$600 or more for tax year 2025 ($2,000 or more for tax year 2026)&#8221;, and repeats that figure on the 1099-MISC rows. One California exception is worth carrying: the Franchise Tax Board keeps $600 for Forms 1099-K issued to app-based drivers.<\/p>\n<p>Wisconsin has said no outright. Asked directly whether it follows the federal change, the Department of Revenue answered that &#8220;the threshold under Wisconsin law remains $600 for certain Form 1099s required to be filed with the department&#8221; and that &#8220;a change to Wisconsin law is required to match the thresholds under federal law&#8221;. Wisconsin writes its own dollar figures into its own statutes rather than pointing at the federal number, which is why the federal change does not reach it. Wisconsin also requires reporting whether or not state tax was withheld.<\/p>\n<p>Mississippi still shows $600 too, but its position is less explicit. Its withholding publication, revised in January 2026, says federal Forms 1099 are acceptable &#8220;to the extent that an information return is required under Mississippi law&#8221; and that &#8220;the reporting of 1099 information is required if payments exceed $600.00&#8221;. The duty and the threshold come from Mississippi law, and the state did not move the figure when it revised the publication after the federal change. It has not published anything addressing that change directly.<\/p>\n<p>A $1,400 payment to a contractor in Wisconsin generates no federal Form 1099-NEC for 2026 and may still be reportable to the state. A single federal filter will miss it entirely.<\/p>\n<p>It is also a mistake to assume every state is either $600 or $2,000. Some sit at neither, and one is higher than the federal figure. Arkansas requires 1099 filing at $2,500 where no Arkansas tax was withheld, and at any amount where it was. Missouri requires an annual statement for payments of $1,200 or more from a Missouri source.<\/p>\n<p>So there are at least four state positions in play for tax year 2026: matched the federal $2,000, stayed at $600, sits somewhere in between, or sits above it. Beyond those, the picture is genuinely unclear. Thomson Reuters reported in May 2026 that most states had not yet aligned to the federal change, and no comprehensive state-by-state survey appears to exist. Treat every client state as a separate question rather than assuming the federal number travels.<\/p>\n<h3 id=\"eleven-states-take-no-1099-nec\">Eleven states take no 1099-NEC<\/h3>\n<p>Alaska, Florida, Illinois, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming have no 1099-NEC filing requirement, and none of them participates in the Combined Federal\/State Filing programme. For most, the reason is simply that there is no personal income tax on non-employee compensation and no withholding regime for the form to attach to.<\/p>\n<p>Illinois is the one usually left off the published lists. Its Publication 110, revised January 2026, says all Forms 1099 other than the 1099-K are not required unless the Department requests them, and that payers who withheld Illinois income tax may submit them voluntarily through the state&#8217;s transmission programme or MyTax Illinois.<\/p>\n<p>Tennessee is the only state in the group that states the position outright: &#8220;The state copy of all Form 1099s should not be sent to the state of Tennessee, since there is no requirement to do so.&#8221;<\/p>\n<p>Read the heading precisely, though. It says no 1099-NEC, not no 1099. Florida, New York and Tennessee all require Form 1099-K from payment settlement entities under their own statutes, and Illinois requires it electronically once a payee has four or more separate transactions and the cumulative total passes $1,000.<\/p>\n<p>Washington began requiring Form 1099-B from brokers and barter exchanges for sales of long-term capital assets from 1 January 2026, filed electronically within 90 days of the federal filing, with a $50 penalty for each failure. A state with no income tax is not a state with nothing to file.<\/p>\n<p>Three of the eleven carry a trap for anyone who reads &#8220;no filing&#8221; as &#8220;nothing to do&#8221;.<\/p>\n<p><strong>New York<\/strong> is described wrongly almost everywhere. There is no general 1099-NEC filing requirement: Tax Law section 658(d) merely authorises the Commissioner to require information returns, and the regulation adopted under it gives the Department power to require them &#8220;at any time&#8221; at its discretion rather than annually. New York is not a CF\/SF participant and publishes no 1099 transmittal. But if you withheld New York State, New York City, or Yonkers income tax from a non-wage payment, that payee and the withholding go on Form NYS-45, the quarterly wage reporting return, for the quarter the payment was made. Vendor guides that list New York as &#8220;file only if tax was withheld&#8221; are describing NYS-45 and calling it a 1099 filing. It is not one.<\/p>\n<p><strong>Florida<\/strong> requires a service recipient to report any non-employee paid $600 or more for services in the course of a trade or business to the State Directory of New Hires, within 20 days of the earlier of the first payment or the contract. That is new-hire and child-support reporting rather than tax reporting, and it runs on a 20-day clock rather than an annual one, so it is easy to breach without noticing.<\/p>\n<p><strong>Washington<\/strong> is changing. It has enacted a 9.9% tax on individual Washington taxable income of $1 million or more, beginning 1 January 2028 with the first returns due in 2029. The legislation carries no withholding or information-return duty, so it does not touch a 2026 or 2027 filing. It does mean &#8220;Washington has no income tax&#8221; has stopped being a safe sentence.<\/p>\n<h3 id=\"the-combined-federalstate-filing-programme\">The Combined Federal\/State Filing programme<\/h3>\n<p>Form 1099-NEC is in the programme, and roughly 31 to 32 states plus the District of Columbia take part. Filing through it forwards the return to the participating state, which is why it is worth using.<\/p>\n<p>That range is not vagueness on our part. The two IRS publications that carry the participant list do not agree, and the difference is exactly one state.<\/p>\n<table>\n<thead>\n<tr>\n<th><\/th>\n<th>Publication 1220 (FIRE)<\/th>\n<th>Publication 5718 (IRIS)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Participants<\/td>\n<td>31 states plus DC<\/td>\n<td>32 states plus DC<\/td>\n<\/tr>\n<tr>\n<td>Missouri<\/td>\n<td>Removed<\/td>\n<td>Not listed<\/td>\n<\/tr>\n<tr>\n<td>Oregon<\/td>\n<td><strong>Removed<\/strong> on 23 December 2025<\/td>\n<td><strong>Listed as a participant<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Missouri is out of both. Oregon is the one that splits them: Publication 1220 records &#8220;Removed Oregon as a Combined Federal\/State Filing (CF\/SF) Program participant&#8221;, while Publication 5718 still carries Oregon in its list.<\/p>\n<p>For tax year 2026 the IRIS document is the one to follow, because IRIS becomes the only electronic channel from 1 January 2027 and Publication 1220&#8217;s list describes the system being retired. That said, Oregon separately requires direct filing through its own iWire system regardless of CF\/SF status, so for that state the answer is the same either way: file with Oregon.<\/p>\n<p>Newer forms are also arriving outside the programme. Form 1099-DA, for digital asset proceeds, is not in the CF\/SF list at all and cannot be filed through FIRE, only through IRIS. So the direction of travel is toward more direct-to-state filing, not less.<\/p>\n<p>It does not close the question either. The IRS is a forwarding agent only, and it says so: some participating states require separate notification that the issuer is filing this way, and each state&#8217;s requirements can change.<\/p>\n<p>Two participants show how differently this plays out. Mississippi takes part but requires 1099s with Mississippi tax withheld to go directly to the Department of Revenue. California takes part and says the opposite, that if the amounts reported to the IRS and to California are the same, do not file with California separately.<\/p>\n<p>So the programme reduces the work, it does not remove the per-state check. If you already track a client&#8217;s state obligations for <a href=\"https:\/\/skillarbitra.ge\/blog\/us-sales-tax-nexus-remote-bookkeepers\/\" target=\"_blank\" rel=\"noopener\">state sales tax nexus<\/a>, add a 1099 column to the same tracker rather than building a second one.<\/p>\n<h3 id=\"penalties\">Penalties<\/h3>\n<p>Two penalties can apply to the same form. Section 6721 covers failing to file a correct return with the IRS. Section 6722 covers failing to furnish a correct statement to the recipient. Miss both and both apply, so a single 1099-NEC that was neither filed nor furnished carries $340 twice, not once.<\/p>\n<p>The figures below are the ones that apply to this article&#8217;s forms. Tax year 2026 returns are filed in 2027, so the governing amounts are those the IRS set for returns required to be filed in calendar year 2027, in Revenue Procedure 2025-32. Note that the IRS summary penalty page on its website still shows only 2024 through 2026, so checking that page alone gives the wrong year.<\/p>\n<table>\n<thead>\n<tr>\n<th>How late<\/th>\n<th>Penalty per return<\/th>\n<th>Annual cap, small business<\/th>\n<th>Annual cap, over $5m receipts<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Corrected within 30 days<\/td>\n<td>$60<\/td>\n<td>$244,500<\/td>\n<td>$698,500<\/td>\n<\/tr>\n<tr>\n<td>Corrected by 1 August<\/td>\n<td>$130<\/td>\n<td>$698,500<\/td>\n<td>$2,095,500<\/td>\n<\/tr>\n<tr>\n<td>After 1 August, or not filed<\/td>\n<td>$340<\/td>\n<td>$1,397,000<\/td>\n<td>$4,191,500<\/td>\n<\/tr>\n<tr>\n<td>Intentional disregard<\/td>\n<td>$690, or 10% of the amount required to be reported, whichever is greater<\/td>\n<td>None<\/td>\n<td>None<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The three per-return tiers are unchanged from 2026. Only the intentional disregard figure moved, from $680 to $690, and the caps stepped up with inflation. A small business here means average annual gross receipts of not more than $5 million over the prior three years.<\/p>\n<p>The absence of a cap on intentional disregard is the part worth understanding. Section 6721(e) switches off the annual limitations entirely for that tier, so exposure scales with the number of forms and has no ceiling.<\/p>\n<h3 id=\"how-to-correct-a-filed-1099\">How to correct a filed 1099<\/h3>\n<p>Tick the CORRECTED box only when the original has already gone to the IRS or to the recipient. A form you have not yet transmitted is simply edited.<\/p>\n<p>The IRS splits corrections into two types, and the difference is how many returns you file.<\/p>\n<p>Type 1 takes one corrected return carrying the right information, with the CORRECTED box ticked. It covers more than a wrong dollar amount: a wrong code, a wrong checkbox, and a return that should never have been filed at all are all Type 1.<\/p>\n<p>Type 2 takes two returns. It covers a missing payee taxpayer identification number, an incorrect one, an incorrect payee name, or an original filed on the wrong type of return. The first return repeats the original identifying information with zeros in every money box to void it, and this is the one that carries the CORRECTED tick. The second return carries the correct name, number and amounts and is filed as a <strong>new original<\/strong>, with the CORRECTED box left blank.<\/p>\n<p>Two mistakes to avoid here. Filing only the replacement leaves the original standing and the recipient double-counted. Ticking CORRECTED on the replacement as well is also wrong, because the replacement is not correcting anything the IRS has on file.<\/p>\n<p>A third one is worth naming because the box invites it. The VOID box does not fix a filed return. It exists to discard a form you spoiled before submission, and the IRS states plainly that an &#8220;X&#8221; in VOID &#8220;will not correct a previously filed return&#8221;. Once a return has gone in, corrections are the only route.<\/p>\n<p>One relief that is easy to miss. Regulations section 301.6724-1 does not require corrected returns for missing or incorrect taxpayer identification numbers where the reasonable-cause criteria are met. In that case you are required only to put the correct number on the next original return you file. The IRS still encourages filing the correction so it can update the payee&#8217;s records, and reasonable cause has to be established rather than assumed, but a bookkeeper facing a pile of inherited TIN errors should know the path exists.<\/p>\n<p>Correcting promptly also matters financially, because the penalty tiers are driven by how late the correct information arrives. A correction filed within 30 days sits in the $60 band.<\/p>\n<p>For Indian professionals building this kind of US compliance work into a practice, the demand side is worth understanding as well as the rules. LawSikho&#8217;s overview of <a href=\"https:\/\/lawsikho.com\/blog\/remote-work-opportunities-with-us-startups\/\" target=\"_blank\" rel=\"noopener\">remote finance roles with US clients<\/a> sets out where that demand sits and which functions US companies are willing to send offshore.<\/p>\n<h2 id=\"h2-9\">Common 1099 filing season 2026 mistakes<\/h2>\n<p>Nine recurring errors, each with the correction.<\/p>\n<p><strong>One $2,000 filter across the whole ledger.<\/strong> It hides attorney gross proceeds at $600 and royalties at $10. Test each payment type against its own threshold.<\/p>\n<p><strong>Card payments included on the 1099-NEC.<\/strong> This double-reports the vendor and triggers a matching notice against them. Exclude every card and third-party network payment.<\/p>\n<p><strong>Trusting the payment method dropdown in QuickBooks.<\/strong> Selecting &#8220;Credit Card&#8221; as the payment method does not exclude an expense from the 1099 reports; posting it to a credit card account does. Reconcile by account, mid-year.<\/p>\n<p><strong>Assuming the federal threshold travels to the states.<\/strong> A payment below $2,000 can still be reportable in a state that shows $600, and Mississippi and Wisconsin both still do. Arkansas sits at $2,500 and Missouri at $1,200, so the state figure can be higher or lower. Check the client&#8217;s state alongside the federal rule.<\/p>\n<p><strong>Leaving the $600 trigger in the software.<\/strong> Most systems still flag contractors at $600. Move it to $2,000 for 2026 payments only, and make sure 2025 payments keep the old figure.<\/p>\n<p><strong>Putting contractor pay on a 1099-MISC.<\/strong> It does not count as filed, and the later 1099-MISC deadlines hide the miss until the penalty tier has moved.<\/p>\n<p><strong>Emailing recipient copies without consent.<\/strong> Electronic delivery needs the recipient&#8217;s affirmative electronic consent first. Without it the statement was not validly furnished, whatever your software says it sent.<\/p>\n<p><strong>Chasing W-9s in January.<\/strong> Vendors who have already been paid respond slowly, and former vendors often not at all. Make the W-9 a condition of vendor setup.<\/p>\n<p><strong>Filtering vendors on the LLC box.<\/strong> Only an LLC that elected C or S treatment is exempt, and a disregarded single-member LLC does not tick the LLC box at all: it ticks its owner&#8217;s classification, usually individual or sole proprietor. Read line 3a and the letter beside the LLC box.<\/p>\n<p><strong>Assuming the FIRE credentials still work.<\/strong> IRIS is the only electronic channel after 1 January 2027, and a FIRE transmitter control code does not carry over. Apply for the IRIS code well before January 2027.<\/p>\n<h2 id=\"h2-10\">Frequently asked questions<\/h2>\n<p><strong>Do I file a 1099-NEC for a contractor paid through PayPal?<\/strong>\nNo. Third-party network payments are reported by the settlement organisation on Form 1099-K, not by the payer on Form 1099-NEC. If PayPal&#8217;s own threshold of more than $20,000 and more than 200 transactions is not met, no form is issued by anyone, and the contractor still reports the income.<\/p>\n<p><strong>A client paid a contractor $1,800 by ACH in 2026. Does a Form 1099-NEC go out?<\/strong>\nNot for federal purposes. The tax year 2026 threshold for nonemployee compensation is $2,000. Check the contractor&#8217;s state, because some states remain at $600. The contractor still owes tax on the $1,800.<\/p>\n<p><strong>The vendor&#8217;s W-9 says LLC. Do I file?<\/strong>\nRead the letter beside the LLC box on line 3a of the Form W-9. C or S means the LLC elected corporate treatment and is exempt. P means it is taxed as a partnership and is reportable. Note that a disregarded single-member LLC does not tick the LLC box at all, because the W-9 tells it to tick its owner&#8217;s classification instead, so it usually arrives showing individual or sole proprietor. That vendor is reportable.<\/p>\n<p><strong>What if a vendor refuses to give a W-9?<\/strong>\nApply 24% backup withholding to payments once they reach the $2,000 threshold, remit the withheld amount to the IRS, and file a Form 1099-NEC showing the payment and the withholding. Where backup withholding has been applied, the form is required regardless of the amount paid.<\/p>\n<p><strong>Does the $2,000 threshold apply to attorney payments?<\/strong>\nPartly. Attorneys&#8217; fees for services reported in box 1a of Form 1099-NEC follow the $2,000 threshold. Gross proceeds paid to an attorney, reported in box 10 of Form 1099-MISC, stayed at $600. Both are reportable even when the law firm is a corporation.<\/p>\n<p><strong>When are 2026 Forms 1099-NEC due?<\/strong>\nRecipient copies and the IRS copy are both due on 1 February 2027, because the statutory date of 31 January falls on a Sunday. There is no automatic extension for Form 1099-NEC.<\/p>\n<p><strong>Do I have to file electronically?<\/strong>\nIf the client files 10 or more information returns in total across all types, yes. The threshold aggregates rather than applying per form type, so W-2s and 1099s count together.<\/p>\n<p><strong>Can I still use the FIRE system for the 2026 forms?<\/strong>\nNo. The IRS states that after 1 January 2027 the Information Returns Intake System is the only information returns electronic filing system, covering current year, prior year and corrections. It also stopped accepting new FIRE transmitter control code applications from 21 July 2026. A FIRE code does not carry over, so a separate IRIS application is required.<\/p>\n<p><strong>What happens if the taxpayer identification number on a filed 1099 was wrong?<\/strong>\nTwo returns are needed. The first repeats the original identifying information with zeros in the money boxes to void it, and that one carries the CORRECTED tick. The second carries the correct name, number and amounts and is filed as a new original with the CORRECTED box blank. Filing only the second leaves the original in place and the recipient double-counted.<\/p>\n<p><strong>Do I have to file with the state as well as the IRS?<\/strong>\nUsually, but not always. Eleven states have no 1099-NEC filing requirement: Alaska, Florida, Illinois, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. Note that several of them still require other 1099 forms, such as the 1099-K. Form 1099-NEC is in the Combined Federal\/State Filing programme, joined by 31 to 32 states plus the District of Columbia depending on which IRS publication you read, but the IRS forwards only and some participating states still want a direct submission. Thresholds have also decoupled from the federal figure for 2026, so check the state rule separately.<\/p>\n<p><strong>What is the penalty for a late Form 1099-NEC?<\/strong>\nTax year 2026 forms are filed in 2027, so the amounts set for returns required to be filed in calendar year 2027 apply: $60 per return if corrected within 30 days, $130 if corrected by 1 August, and $340 after that or if never filed. Intentional disregard is $690 per return or 10% of the reportable amount, whichever is greater, with no cap. Separate penalties can apply for the IRS copy and the recipient copy, so a form that was neither filed nor furnished carries the amount twice.<\/p>\n<p><strong>Can a bookkeeper outside the United States file 1099s for a US client?<\/strong>\nYes, working on the client&#8217;s behalf and under their authorisation. The client remains the filer of record and the forms go out under their employer identification number. A transmitter control code is issued to a business following identity verification tied to a US responsible official, so it usually sits with the client or their CPA firm rather than with an offshore preparer.<\/p>\n<h2 id=\"h2-11\">References<\/h2>\n<p>All sources were live-checked on 28 July 2026.<\/p>\n<h3 id=\"federal-legislation-and-the-internal-revenue-code\">Federal legislation and the Internal Revenue Code<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.govinfo.gov\/app\/details\/PLAW-119publ21\" target=\"_blank\" rel=\"noopener\">Public Law 119-21<\/a>, &#8220;An act to provide for reconciliation pursuant to title II of H. Con. Res. 14&#8221;, enacted 4 July 2025 and commonly called the One Big Beautiful Bill Act &#8211; US Government Publishing Office. Section 70432 restores the Form 1099-K threshold; section 70433 raises the general reporting threshold.<\/li>\n<li>Internal Revenue Code, the provisions relied on here:\n   &#8211; Section 6041, information at source. Subsection (a) sets the reporting threshold; subsection (h), &#8220;Inflation adjustment&#8221;, applies the section 1(f)(3) cost-of-living adjustment from 2027 using calendar year 2025 as the base.\n   &#8211; Section 6041A, returns regarding payments of remuneration for services and direct sales. Subsection (a) cross-references the dollar amount in effect under section 6041(a).\n   &#8211; Section 6050W, returns relating to payments made in settlement of payment card and third party network transactions. Subsection (c)(2) defines a payment card transaction; subsection (e), &#8220;Exception for de minimis payments by third party settlement organizations&#8221;, carries the $20,000 and 200-transaction test and reaches third party network transactions only.\n   &#8211; Section 3406, backup withholding. Subsection (b)(6)(A) cross-references the dollar amount in effect under section 6041(a).\n   &#8211; Section 6721, failure to file correct information returns. Subsection (d) gives the lower annual limitations for persons with gross receipts of not more than $5,000,000; subsection (e), &#8220;Penalty in case of intentional disregard&#8221;, disapplies subsections (b), (c) and (d), which is why that tier has no cap.\n   &#8211; Section 6722, failure to furnish correct payee statements.<\/li>\n<li>Fair Labor Standards Act of 1938, <a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/29\/207\" target=\"_blank\" rel=\"noopener\">section 7 (29 U.S.C. 207), &#8220;Maximum hours&#8221;<\/a> &#8211; the overtime definition used for box 1d.<\/li>\n<\/ol>\n<h3 id=\"irs-forms-instructions-and-publications\">IRS forms, instructions and publications<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.irs.gov\/instructions\/i1099mec\" target=\"_blank\" rel=\"noopener\">Instructions for Forms 1099-MISC and 1099-NEC (12\/2026)<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1099nec.pdf\" target=\"_blank\" rel=\"noopener\">Form 1099-NEC, Nonemployee Compensation (Rev. December 2026)<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1099msc.pdf\" target=\"_blank\" rel=\"noopener\">Form 1099-MISC, Miscellaneous Information (Rev. December 2026)<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/instructions\/i1099k\" target=\"_blank\" rel=\"noopener\">Instructions for Form 1099-K (12\/2026)<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/publications\/p1099\" target=\"_blank\" rel=\"noopener\">Publication 1099 (2026), General Instructions for Certain Information Returns<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p1220.pdf\" target=\"_blank\" rel=\"noopener\">Publication 1220 (Rev. 05-2026), Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498 and W-2G<\/a> &#8211; Internal Revenue Service. Combined Federal\/State Filing programme at Part A section 12; Table 1 lists 31 states plus DC. Exhibit 2 records &#8220;Removed Oregon as a Combined Federal\/State Filing (CF\/SF) Program participant&#8221; on 23 December 2025, and the What&#8217;s New section records Missouri removed. This is the tax year 2025 edition covering FIRE; no tax year 2026 revision had been issued at the time of writing.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p5718.pdf\" target=\"_blank\" rel=\"noopener\">Publication 5718 (Processing Year 2026), Information Returns Intake System (IRIS) Electronic Filing Application to Application (A2A) Specifications<\/a> &#8211; Internal Revenue Service. Its Combined Federal\/State Filing list carries 32 states plus DC, including Oregon and excluding Missouri, which differs from Publication 1220 by exactly one state.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-w-9\" target=\"_blank\" rel=\"noopener\">About Form W-9, Request for Taxpayer Identification Number and Certification<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-8809\" target=\"_blank\" rel=\"noopener\">About Form 8809, Application for Extension of Time to File Information Returns<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f8508.pdf\" target=\"_blank\" rel=\"noopener\">Form 8508 (Rev. 5-2026), Application for a Waiver from Electronic Filing of Information Returns<\/a> &#8211; Internal Revenue Service<\/li>\n<\/ol>\n<h3 id=\"irs-guidance-and-administrative-material\">IRS guidance and administrative material<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-25-62.pdf\" target=\"_blank\" rel=\"noopener\">Notice 2025-62, Relief from Certain Penalties Related to Information Reporting Required in Connection with No Tax on Tips and Overtime<\/a> &#8211; Internal Revenue Service. The relief applies to taxable year 2025 only.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/rp-25-32.pdf\" target=\"_blank\" rel=\"noopener\">Revenue Procedure 2025-32<\/a>, sections 4.57 and 4.58 &#8211; Internal Revenue Service, also published at <a href=\"https:\/\/www.irs.gov\/irb\/2025-45_IRB\" target=\"_blank\" rel=\"noopener\">Internal Revenue Bulletin 2025-45<\/a>. Sets the section 6721 and 6722 penalty amounts for returns required to be filed in 2027.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/payments\/information-return-penalties\" target=\"_blank\" rel=\"noopener\">Information return penalties<\/a> &#8211; Internal Revenue Service. Note that this summary page showed only 2024 to 2026 when checked; the 2027 amounts are in Revenue Procedure 2025-32 above.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/filing\/e-file-information-returns\" target=\"_blank\" rel=\"noopener\">E-file information returns<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/filing\/e-file-forms-1099-with-iris\" target=\"_blank\" rel=\"noopener\">E-file information returns with IRIS<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/e-file-providers\/filing-information-returns-electronically-fire\" target=\"_blank\" rel=\"noopener\">Filing Information Returns Electronically (FIRE)<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/tax-professionals\/taxpayer-identification-number-tin-matching\" target=\"_blank\" rel=\"noopener\">Taxpayer Identification Number (TIN) Matching<\/a> &#8211; Internal Revenue Service<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/backup-withholding\" target=\"_blank\" rel=\"noopener\">Backup withholding<\/a> &#8211; Internal Revenue Service, for the 24% rate. Note that section 3406(a) expresses the rate as the fourth lowest rate of tax under section 1(c) rather than as a fixed percentage, so it moves if that bracket moves.<\/li>\n<li><a href=\"https:\/\/www.irs.gov\/businesses\/understanding-your-form-1099-k\" target=\"_blank\" rel=\"noopener\">Understanding your Form 1099-K<\/a> &#8211; Internal Revenue Service<\/li>\n<\/ol>\n<h3 id=\"state-guidance\">State guidance<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.dfa.arkansas.gov\/wp-content\/uploads\/withholdInstructions.pdf\" target=\"_blank\" rel=\"noopener\">Withholding Tax Instructions<\/a> &#8211; Arkansas Department of Finance and Administration. Sets the $2,500 threshold where no Arkansas tax was withheld, and filing at any amount where it was.<\/li>\n<li><a href=\"https:\/\/www.ftb.ca.gov\/file\/guide-to-information-returns-filed-with-california.html\" target=\"_blank\" rel=\"noopener\">Guide to Information Returns Filed with California<\/a> &#8211; California Franchise Tax Board<\/li>\n<li><a href=\"https:\/\/tax.illinois.gov\/content\/dam\/soi\/en\/web\/tax\/research\/publications\/pubs\/documents\/pub-110.pdf\" target=\"_blank\" rel=\"noopener\">Publication 110, Forms W-2, W-2c, W-2G and 1099 Filing and Storage Requirements for Employers and Payers, including New 1099-K Electronic Filing Requirements (R-01\/26)<\/a> &#8211; Illinois Department of Revenue<\/li>\n<li><a href=\"https:\/\/www.flsenate.gov\/Laws\/Statutes\/2024\/212.134\" target=\"_blank\" rel=\"noopener\">Florida Statutes section 212.134, Information returns relating to payment-card and third party network transactions<\/a> &#8211; The Florida Senate<\/li>\n<li><a href=\"https:\/\/www.flsenate.gov\/Laws\/Statutes\/2024\/409.2576\" target=\"_blank\" rel=\"noopener\">Florida Statutes section 409.2576, State Directory of New Hires<\/a> &#8211; The Florida Senate<\/li>\n<li><a href=\"https:\/\/www.dor.ms.gov\/sites\/default\/files\/tax-forms\/business\/89700251revised1.13.2026.pdf\" target=\"_blank\" rel=\"noopener\">Publication 89-700, Withholding Income Tax Tables and Employer Instructions<\/a> &#8211; Mississippi Department of Revenue, revised January 2026<\/li>\n<li><a href=\"https:\/\/dor.mo.gov\/taxation\/business\/tax-types\/withholding\/reporting-misc-income.html\" target=\"_blank\" rel=\"noopener\">Reporting Miscellaneous Income<\/a> &#8211; Missouri Department of Revenue. Annual statement required for payments of $1,200 or more from a Missouri source.<\/li>\n<li><a href=\"https:\/\/www.nysenate.gov\/legislation\/laws\/TAX\/658\" target=\"_blank\" rel=\"noopener\">New York Tax Law section 658, Requirements concerning returns, notices, records and statements<\/a> &#8211; New York State Senate. Subsection (d) on information at source is permissive.<\/li>\n<li><a href=\"https:\/\/www.law.cornell.edu\/regulations\/new-york\/20-NYCRR-158.10\" target=\"_blank\" rel=\"noopener\">20 NYCRR 158.10, Power to require New York State information returns<\/a> &#8211; New York Codes, Rules and Regulations<\/li>\n<li><a href=\"https:\/\/www.tax.ny.gov\/pdf\/current_forms\/wt\/nys45i.pdf\" target=\"_blank\" rel=\"noopener\">Form NYS-45-I, Instructions for Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return (1\/26)<\/a> &#8211; New York State Department of Taxation and Finance<\/li>\n<li><a href=\"https:\/\/www.tax.ny.gov\/bus\/multi\/reporting_requiremts.htm\" target=\"_blank\" rel=\"noopener\">Reporting requirements for entities making payments to merchants as reimbursement for credit and debit card transactions<\/a> &#8211; New York State Department of Taxation and Finance<\/li>\n<li><a href=\"https:\/\/revenue.support.tn.gov\/hc\/en-us\/articles\/360057593951-GEN-22-Federal-Tax-Documents\" target=\"_blank\" rel=\"noopener\">GEN-22, Federal Tax Documents<\/a> &#8211; Tennessee Department of Revenue<\/li>\n<li><a href=\"https:\/\/dor.wa.gov\/taxes-rates\/income-tax\" target=\"_blank\" rel=\"noopener\">Income tax<\/a> &#8211; Washington Department of Revenue<\/li>\n<li><a href=\"https:\/\/dor.wa.gov\/forms-publications\/publications-subject\/special-notices\/new-documentation-requirement-sales-or-exchanges-long-term-capital-assets\" target=\"_blank\" rel=\"noopener\">New documentation requirement for sales or exchanges of long-term capital assets<\/a> &#8211; Washington Department of Revenue<\/li>\n<li><a href=\"https:\/\/www.revenue.wi.gov\/Pages\/FAQS\/pcs-1099.aspx\" target=\"_blank\" rel=\"noopener\">Forms W-2 and 1099 Filing by Employers and Others Making Reportable Payments<\/a> &#8211; Wisconsin Department of Revenue<\/li>\n<li><a href=\"https:\/\/www.revenue.wi.gov\/Pages\/TaxPro\/2026\/TaxPractitonerFall2025QandA.aspx\" target=\"_blank\" rel=\"noopener\">2025 Fall Tax Updates, Practitioner Questions and Answers<\/a> &#8211; Wisconsin Department of Revenue<\/li>\n<\/ol>\n<h3 id=\"vendor-documentation\">Vendor documentation<\/h3>\n<ol>\n<li><a href=\"https:\/\/quickbooks.intuit.com\/learn-support\/en-us\/help-article\/form-1099-nec\/payments-excluded-1099-nec-1099-misc\/L8bOWEWEs_US_en_US\" target=\"_blank\" rel=\"noopener\">Understand which payments are excluded from a 1099-NEC and 1099-MISC<\/a> &#8211; Intuit QuickBooks<\/li>\n<\/ol>\n<hr>\n<p><em>This article is for informational and educational purposes only and does not constitute professional, financial, legal, or tax advice. US information reporting rules change frequently, and some guidance referenced here, including the proposed regulations on 1099-K backup withholding, was not final when this was written. Consult a qualified US tax professional before acting on any filing decision.<\/em><\/p>\n\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Do I file a 1099-NEC for a contractor paid through PayPal?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"No. Third-party network payments are reported by the settlement organisation on Form 1099-K, not by the payer on Form 1099-NEC. If PayPal's own threshold of more than 20,000 dollars and more than 200 transactions is not met, no form is issued by anyone, and the contractor still reports the income on their return.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"A client paid a contractor 1,800 dollars by ACH in 2026. Does a Form 1099-NEC go out?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Not for federal purposes. The tax year 2026 threshold for nonemployee compensation is 2,000 dollars. Check the contractor's state, because some states remain at 600 dollars. The contractor still owes tax on the 1,800 dollars whether or not a form is issued.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"The vendor's W-9 says LLC. Do I file a 1099?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Read the letter beside the LLC box on line 3a of the Form W-9. C or S means the LLC elected corporate treatment and is exempt. P means it is taxed as a partnership and is reportable. Note that a disregarded single-member LLC does not tick the LLC box at all, because the W-9 tells it to tick its owner's classification instead, so it usually arrives showing individual or sole proprietor. That vendor is reportable.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What if a vendor refuses to give a W-9?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Apply 24 percent backup withholding to payments once they reach the 2,000 dollar threshold, remit the withheld amount to the IRS, and file a Form 1099-NEC showing the payment and the withholding. Where backup withholding has been applied, the form is required regardless of the amount paid.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Does the 2,000 dollar threshold apply to attorney payments?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Only partly. Attorneys' fees for services, reported in box 1a of Form 1099-NEC, follow the 2,000 dollar threshold for tax year 2026. Gross proceeds paid to an attorney, reported in box 10 of Form 1099-MISC, stayed at 600 dollars. Both are reportable even when the law firm is a corporation.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"When are 2026 Forms 1099-NEC due?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Recipient copies and the IRS copy are both due on 1 February 2027, because the statutory date of 31 January falls on a Sunday and the IRS rule moves a weekend due date to the next business day. There is no automatic extension available for Form 1099-NEC.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Do I have to file 1099s electronically?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"If the client files 10 or more information returns in total across all types, yes. The threshold aggregates rather than applying per form type, so W-2s and 1099s count together toward the 10.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Can I still use the FIRE system for the 2026 forms?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"No. The IRS states that after 1 January 2027 the Information Returns Intake System is the only information returns electronic filing system, covering current year, prior year and corrections. It also stopped accepting new FIRE transmitter control code applications from 21 July 2026. A FIRE code does not carry over, so a separate IRIS application is required.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What happens if the taxpayer identification number on a filed 1099 was wrong?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Two returns are needed. The first repeats the original identifying information with zeros in the money boxes to void it, and that one carries the CORRECTED tick. The second carries the correct name, number and amounts and is filed as a new original with the CORRECTED box left blank. Filing only the second leaves the original in place and the recipient double-counted.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Do I have to file 1099s with the state as well as the IRS?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Usually, but not always. Eleven states have no 1099-NEC filing requirement: Alaska, Florida, Illinois, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. Several of them still require other 1099 forms, such as the 1099-K. Form 1099-NEC is included in the Combined Federal\/State Filing programme, joined by 31 to 32 states plus the District of Columbia depending on which IRS publication you read, but the IRS acts as a forwarding agent only and some participating states still require a direct submission. State thresholds have also decoupled from the federal figure for 2026, so check the state rule separately.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the penalty for a late Form 1099-NEC?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Tax year 2026 forms are filed in 2027, so the amounts set for returns required to be filed in calendar year 2027 apply: 60 dollars per return if corrected within 30 days, 130 dollars if corrected by 1 August, and 340 dollars after that or if the return is never filed. Intentional disregard is 690 dollars per return or 10 percent of the reportable amount, whichever is greater, with no cap. Separate penalties can apply to the IRS copy and the recipient copy of the same form, so a form that was neither filed nor furnished carries the amount twice.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Can a bookkeeper outside the United States file 1099s for a US client?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Yes, working on the client's behalf and under their authorisation. The client remains the filer of record and the forms go out under their employer identification number. A transmitter control code is issued to a business following identity verification tied to a US responsible official, so it usually sits with the client or their CPA firm rather than with an offshore preparer.\"\n      }\n    }\n  ]\n}\n<\/script>\n\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"HowTo\",\n  \"name\": \"The year-end 1099 workflow for bookkeepers\",\n  \"description\": \"A nine-step workflow a bookkeeper runs across the year so that a US client's Forms 1099-NEC and 1099-MISC for tax year 2026 are correct and filed on time in early 2027.\",\n  \"totalTime\": \"P11M\",\n  \"step\": [\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 1,\n      \"name\": \"Collect the W-9 before the first payment\",\n      \"text\": \"Make an on-file Form W-9 a condition of vendor setup in the accounting system and do not release the first payment without it. A vendor who has already been paid has no reason to hurry, and a former vendor may not answer at all.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 2,\n      \"name\": \"Run TIN Matching before you rely on the number\",\n      \"text\": \"Use the IRS TIN Matching service through e-Services to check each name and taxpayer identification number pair against IRS records. Checking early costs nothing. Discovering a mismatch after filing costs two corrected returns.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 3,\n      \"name\": \"Post every payment to the account it actually came from\",\n      \"text\": \"This step decides the split between Form 1099-NEC and Form 1099-K. Card payments belong against a card account and ACH against the bank account. In QuickBooks Online the payment method label does not drive the exclusion, the account does. Build it into the bank feed rules.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 4,\n      \"name\": \"Change the threshold in the software itself\",\n      \"text\": \"Most bookkeeping and payroll systems ship with a 600 dollar trigger that flags contractors for 1099 issuance. Move it to 2,000 dollars, and only for 2026 payments. Payments made in 2025 still follow the old figure, so a system that applies one threshold across both years will be wrong for one of them.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 5,\n      \"name\": \"Review vendors against the thresholds quarterly\",\n      \"text\": \"A quarterly pass catches the vendor who crossed 2,000 dollars mid-year, the vendor with no W-9 who is about to trigger backup withholding, and the attorney payment under 600 dollars that a flat 2,000 dollar filter would hide.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 6,\n      \"name\": \"Sort out the filing channel in October\",\n      \"text\": \"For tax year 2026 this is not routine. The IRS FIRE system is being replaced by the Information Returns Intake System, a FIRE transmitter control code does not carry over, and a separate IRIS application takes time to process.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 7,\n      \"name\": \"Freeze and reconcile in December\",\n      \"text\": \"Close the vendor list, reconcile 1099-eligible payments to the general ledger, and produce a draft list showing each vendor's amount and the reason they are in or out. Chase the last missing W-9s here, while a final payment can still be withheld on.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 8,\n      \"name\": \"Draft, review with the client, and furnish in January\",\n      \"text\": \"Send the client the draft list before generating forms. They know which vendor incorporated mid-year and which payment was a reimbursement rather than a fee. Then furnish recipient copies by the deadline. Note that electronic delivery is not valid without the recipient's prior affirmative electronic consent, together with the required disclosures about paper copies, withdrawal of consent, and the hardware and software needed. Without that consent the statement was not validly furnished and the section 6722 penalty can apply.\"\n    },\n    {\n      \"@type\": \"HowToStep\",\n      \"position\": 9,\n      \"name\": \"File, then archive the proof\",\n      \"text\": \"Keep the accepted filing confirmation, the vendor list as filed, and every Form W-9. If a penalty notice arrives eighteen months later, that file is the entire defence.\"\n    }\n  ]\n}\n<\/script>\n\n\n<style>.ls-cta-br{display:none;}@media(max-width:768px){#ls-floating-cta{padding:8px 12px !important;}#ls-floating-cta .ls-wrap{flex-direction:column !important;align-items:center !important;gap:8px !important;}#ls-floating-cta a{font-size:11px !important;padding:8px 16px !important;white-space:normal !important;text-align:center !important;max-width:90vw !important;}.ls-cta-br{display:block !important;}}<\/style><div id=\"ls-floating-cta\" style=\"position:fixed;bottom:0;left:0;right:0;z-index:9999;background:#0f0f0f;border-top:3px solid #2941BA;padding:12px 20px;box-shadow:0 -4px 20px rgba(0,0,0,0.3);\"><div class=\"ls-wrap\" style=\"display:flex;align-items:center;justify-content:center;gap:24px;\"><div style=\"display:flex;align-items:center;gap:10px;\"><a href=\"https:\/\/growthx.lawsikho.com\/f\/14may-id-30day-lpcore1?p_source=id2_blog_sa&#038;p_cta=sa-id-1099-filing-season-bookkeepers\" onclick=\"gtag(&#039;event&#039;,&#039;cta_click&#039;,{send_to:&#039;G-B23VVGPQ92&#039;,p_source:&#039;id2_blog_sa&#039;,p_cta:&#039;sa-id-1099-filing-season-bookkeepers&#039;});\" target=\"_blank\" rel=\"noopener\" style=\"display:inline-block;background:#2941BA;color:#fff;padding:11px 20px;border-radius:7px;font-size:13px;font-weight:700;text-decoration:none;white-space:nowrap;\">Become a board-ready Independent Director in 30 days \u2014<br class=\"ls-cta-br\"> Rs. 100 \u2192<\/a><button onclick=\"document.getElementById('ls-floating-cta').style.display='none'\" style=\"background:none;border:none;color:#555;font-size:18px;cursor:pointer;padding:4px;line-height:1;position:absolute;right:16px;\">\u2715<\/button><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In 1099 filing season 2026 the 1099-NEC threshold is $2,000 and the 1099-K threshold is $20,000 and 200 transactions. Payment method decides the form.<\/p>\n","protected":false},"author":35,"featured_media":4675,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[798,745,36],"tags":[1443,1442,1364,1360,1441,1440,801,1438,1439],"class_list":["post-4674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-accounting-tax","category-accounting-and-tax","category-bookkeeper","tag-1099-filing-season-2026","tag-1099-threshold","tag-1099-k","tag-1099-nec","tag-backup-withholding","tag-iris","tag-remote-bookkeeping","tag-us-tax-compliance","tag-w-9"],"_links":{"self":[{"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/posts\/4674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/comments?post=4674"}],"version-history":[{"count":2,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/posts\/4674\/revisions"}],"predecessor-version":[{"id":4691,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/posts\/4674\/revisions\/4691"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/media\/4675"}],"wp:attachment":[{"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/media?parent=4674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/categories?post=4674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/skillarbitra.ge\/blog\/wp-json\/wp\/v2\/tags?post=4674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}