By Daniel Sabet · CFO & Financial Advisor, GreenGrowth CPAs · Tax Strategy & Growth Planning · Los Angeles, CA | Published September 2026 | Tax Compliance
The 1099 filing requirements changed this year for the first time in decades, and most published guidance has not caught up. For decades the figure that triggered a Form 1099-NEC or 1099-MISC sat at $600, long enough that it became a reflex. It is now $2,000. So a contractor you paid $1,400 during 2026 does not need a form, while every article still telling you $600 is describing a rule that no longer applies to the returns you are about to file.
QUICK ANSWER
The 1099 filing rules cover payments made in the course of a trade or business to someone who is not an employee. Section 70433 of the One Big Beautiful Bill Act raised the reporting threshold under IRC 6041 and 6041A from $600 to $2,000. Specifically it applies to payments made after December 31, 2025, with annual inflation indexing after 2026. Forms for the 2026 tax year are due by Monday, February 1, 2027, since January 31 falls on a Sunday. Additionally, businesses filing ten or more information returns in aggregate must file electronically. Failure to file and failure to furnish are separate penalties under sections 6721 and 6722.
The $600 1099 Filing Threshold Is Now $2,000
Above all, this is the change worth knowing first, because it decides who needs a form at all.
Section 70433 of the One Big Beautiful Bill Act, Public Law 119-21, amended IRC 6041(a) and 6041A(a)(2). Consequently the threshold rose from $600 to $2,000 for payments made after December 31, 2025. From payments made after December 31, 2026, new IRC 6041(h) indexes the figure for inflation using 2025 as the base year, rounded to the nearest $100.
So the first forms affected are the 2026 Forms 1099-NEC and 1099-MISC, filed in early 2027. Meanwhile, for payments made during 2025, the old $600 threshold still governed. The backup withholding threshold under IRC 3406(b)(6) moved to $2,000 alongside it.
What the New Threshold Does Not Cover
Two exceptions catch people out, although both survived the change untouched. Royalties still trigger a Form 1099-MISC at $10. Gross proceeds paid to an attorney still trigger reporting at $600, since that sits under a different code provision.
▶ Reporting Thresholds After the OBBBA
| Payment Type | Form | Threshold |
|---|---|---|
| Nonemployee compensation | 1099-NEC | $2,000 |
| Rents, prizes, other income | 1099-MISC | $2,000 |
| Royalties | 1099-MISC | $10, unchanged |
| Attorney gross proceeds | 1099-MISC | $600, unchanged |
| Payment apps and marketplaces | 1099-K | $20,000 and 200 transactions |
The most common error circulating is applying the $2,000 figure to Form 1099-K. It does not. Section 70432 restored the 1099-K threshold to $20,000 and more than 200 transactions, retroactively, and the $600 rule for payment apps never took effect.
💬 The Conversation Worth Having
Raising the threshold reduces forms, not risk. Even so, a payment under $2,000 is still taxable income, still needs a valid W-9 on file, and still counts toward the total if you pay that vendor again in November. More importantly, the threshold decides whether a form is required, not whether the worker was classified correctly in the first place. So the businesses celebrating fewer 1099s this year are often the ones with the exposure that actually costs money.
Not sure which vendors now fall below the line? Our tax team runs the ledger against the new threshold.
1099 Filing Deadlines
Form 1099-NEC carries the tightest deadline, since it goes to both the recipient and the IRS on the same date. Other forms split those two obligations instead.
Form 1099-NEC. Due to recipients and to the IRS on January 31, moving to the next business day when that falls on a weekend. There is no extended date for electronic filers.
Form 1099-MISC. Send recipient copies by January 31, or February 15 where the form reports substitute payments in box 8 or gross proceeds to an attorney in box 10. The IRS copy follows later, February 28 on paper and March 31 electronically.
State filing. Additionally many states require their own copy, and several participate in the Combined Federal State Filing Program while others do not. Consequently a business operating across state lines can satisfy the IRS and still miss a state obligation entirely.
The Electronic 1099 Filing Rule That Catches Small Employers
Mandatory electronic filing now starts at ten returns rather than 250, and the count works differently from what most people assume.
Importantly, ten is an aggregate across information return types. W-2s count, and so does every 1099 variety. So an employer with six employees and five contractors has eleven returns and must file all of them electronically, even though neither category reaches ten on its own.
Filing on paper when electronic filing is required counts as a failure to file. Therefore a business that mailed forms in on time can still draw the full penalty, which is a surprising place to find one.
1099 Filing Penalties, and Why the Headline Number Understates Them
Most articles quote a single per-form figure. In practice there are two penalties, they run on the same tiers, and the IRS can assess both on the same form.
Section 6721 covers failure to file a correct information return with the IRS.
Meanwhile section 6722 covers failure to furnish a correct payee statement to the recipient. Miss both, and both are in play.
How the Tiers Work
Generally the amount depends on how late you are, with the steepest jump on August 1. For returns due in 2026 the tiers ran at $60 per form within 30 days, then $130 through August 1, and $340 after that or if never filed. Intentional disregard carries a substantially higher per-form amount with no annual cap at all. Every figure is inflation-indexed each year. So confirm current amounts on IRS.gov rather than relying on an older article, including this one.
One point worth knowing before you call the IRS: First-Time Abate does not apply to information return penalties. That relief covers income tax failure-to-file and failure-to-pay. Relief here generally requires documented reasonable cause instead, which is a different and harder argument.
The Exposure That Costs More Than Any Penalty
A 1099 is a statement about a relationship. Specifically, issuing one says this person is an independent contractor rather than an employee, and that assertion is testable.
Where the classification does not hold, the cost is not a per-form penalty. Instead it is back payroll taxes, the employer share of FICA, unemployment insurance, interest, and potentially state wage claims. Several states apply tests considerably stricter than the federal one, so a worker who qualifies as a contractor for the IRS may not qualify for the state.
Consequently the question worth asking each January is not only who needs a form. It is whether the people receiving one should have been on payroll all year.
How GreenGrowth CPAs Handles 1099 Filing
We prepare and file Forms 1099-NEC, 1099-MISC and the related information returns, electronically where the aggregate rule requires it. Furthermore recipient copies are handled at the same time.
Vendor review against the new threshold. We run the payment ledger to identify who now falls below $2,000, and flag the vendors between the old and new figures where voluntary filing may still be sensible.
W-9 collection and TIN validation. A missing or mismatched taxpayer identification number triggers backup withholding and IRS B-notices, and it is far easier to collect a W-9 before the first payment than after the relationship ends.
Before the Forms Go Out
Classification review. Before the forms go out, we look at whether the contractor relationships hold up, since that is the exposure the penalties do not measure.
Late and corrected filings. Where forms were missed or filed with errors, we handle the correction and the reasonable cause documentation. See our tax planning and compliance services for the wider calendar.
KEY TAKEAWAYS
- ›The reporting threshold under IRC 6041 and 6041A rose from $600 to $2,000 for payments made after December 31, 2025, under OBBBA section 70433, with inflation indexing after 2026.
- ›That $2,000 figure applies to Forms 1099-NEC and 1099-MISC only. Form 1099-K sits at $20,000 and more than 200 transactions, restored retroactively by section 70432.
- ›Royalties still report at $10 and attorney gross proceeds at $600. Neither moved.
- ›Electronic filing is mandatory at ten information returns counted in aggregate, so W-2s and 1099s combine. Paper filing when e-filing is required counts as failure to file.
- ›Sections 6721 and 6722 are separate penalties covering failure to file and failure to furnish. First-Time Abate does not apply to either.
- ›Worker classification is the larger exposure. Back payroll taxes, the employer FICA share, unemployment insurance and state wage claims all exceed any per-form penalty.
1099 Filing Questions Answered
Thresholds and Forms
What is the 1099 reporting threshold now?+
It is $2,000, raised from $600 by section 70433 of the One Big Beautiful Bill Act. The new figure applies to payments made after December 31, 2025, so the first affected returns are the 2026 Forms 1099-NEC and 1099-MISC filed in early 2027. For payments made during 2025 the old $600 threshold still applied. After December 31, 2026 the amount indexes for inflation, using 2025 as the base year and rounding to the nearest $100.
Does the $2,000 threshold apply to Form 1099-K?+
No, and this is the most common error circulating. Form 1099-K covers payment apps and online marketplaces. Its threshold is $20,000 in gross payments and more than 200 transactions. Section 70432 restored that pre-2021 standard retroactively, so the phased $5,000, $2,500 and $600 amounts never took full effect. The $2,000 figure belongs to Forms 1099-NEC and 1099-MISC only.
Do I still need a W-9 for vendors under $2,000?+
Collect one anyway. The threshold is measured across the full calendar year. So a vendor sitting under the line in June can cross it by December, and by then the relationship may have ended. A W-9 is straightforward to obtain before the first payment and considerably harder afterward. Backup withholding also attaches once the threshold is crossed without a valid taxpayer identification number on file.
Deadlines and Filing
When are 1099 forms due?+
Form 1099-NEC is due to recipients and to the IRS on January 31, moving to the next business day when that lands on a weekend. Recipient copies of Form 1099-MISC are due January 31, or February 15 where the form reports box 8 substitute payments or box 10 attorney gross proceeds. The IRS copy follows, due February 28 on paper and March 31 electronically. For the 2026 tax year the January 31 date falls on a Sunday, so the operative deadline is Monday, February 1, 2027.
Do I have to file 1099s electronically?+
If you file ten or more information returns in aggregate, yes. The count combines types rather than treating each separately, so W-2s and every 1099 variety add together. An employer with six employees and five contractors has eleven returns and must file all of them electronically. Filing on paper when the electronic requirement applies counts as a failure to file. Consequently an on-time paper filing can still draw the full penalty.
Penalties and Risk
What is the penalty for filing a 1099 late?+
Two penalties apply rather than one. Section 6721 covers failure to file a correct return with the IRS and section 6722 covers failure to furnish a correct statement to the recipient, each running on the same tiers. The amount rises with lateness, with the steepest jump on August 1. Meanwhile intentional disregard carries a much higher per-form amount with no annual cap. Every figure is inflation-indexed annually, so confirm current amounts on IRS.gov.
Can I use First-Time Abate on a 1099 penalty?+
No. First-Time Abate covers income tax failure-to-file and failure-to-pay penalties, not information return penalties under sections 6721 and 6722. Relief here generally requires documented reasonable cause. That means showing significant mitigating factors or events beyond your control, together with evidence that you acted responsibly. Building that argument is considerably easier while the circumstances are recent.
Does issuing a 1099 create any other risk?+
Yes, and it is larger than the filing penalty. Essentially a 1099 asserts that the recipient is an independent contractor rather than an employee, and that assertion can be tested. Where it does not hold, the cost is back payroll taxes, the employer share of FICA, unemployment insurance, interest and potentially state wage claims. Several states also apply stricter tests than the federal one, so a worker who qualifies federally may not qualify at state level.
Working With GreenGrowth CPAs
Can GreenGrowth CPAs handle our 1099 filing?+
Yes. We prepare and file Forms 1099-NEC and 1099-MISC along with the related information returns, electronically where the aggregate rule requires it. Meanwhile recipient copies are handled at the same time. That includes reviewing the payment ledger against the new $2,000 threshold and collecting W-9s. We also validate taxpayer identification numbers, review worker classification before forms go out, and handle late or corrected filings with the supporting documentation.
January Is Too Late to Start Chasing W-9s.
Book a 1099 readiness review. We run the ledger against the new threshold, close the gaps, and file on time.
GreenGrowth CPAs · Tax Compliance Team
Sources: One Big Beautiful Bill Act, Public Law 119-21, sections 70432 and 70433; IRC sections 6041, 6041A, 6050W, 6721, 6722 and 3406; Internal Revenue Bulletin 2025-45; IRS Notice 2025-62. This article is general information rather than tax advice, and penalty amounts are inflation-indexed annually. Confirm current figures with the IRS or your tax adviser before relying on them.
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