When to send a 1099, and to whom

You need to send a 1099 when your business paid someone who is not an employee $2,000 or more during the year for their work, and they are not a corporation. The form goes to the contractor and to the IRS by the end of January. That part is easy to look up. The part that makes January miserable is finding out, in the last week, that nobody kept the W-9s and the vendor list in QuickBooks does not say who is incorporated.

The rules below are cited to the IRS, as revised for payments made in 2026. Ledgerbrook keeps books and does not file returns, so for a specific payment you are unsure about, ask the CPA who prepares your return.

Who gets a 1099 from you?

A business files Form 1099-NEC for a payee when all four of these are true (IRS Instructions for Forms 1099-MISC and 1099-NEC, revised December 2026):

1. The payment was for services, made in the course of your trade or business. Payments for parts or materials used to perform the services count too.
2. The payee is not your employee. Employees get a W-2.
3. The payee is not a corporation, with exceptions for lawyers and, on Form 1099-MISC, medical providers.
4. You paid $2,000 or more to that payee during 2026, by cash, check or bank transfer.

Rent works the same way on Form 1099-MISC, box 1: $2,000 or more paid to a landlord who is not a corporation.

Payee	Gets a 1099 from you?	Why
Individual or sole proprietor paid for services	Yes, 1099-NEC, at $2,000 or more	The standard case
Single-member LLC with no corporate election	Yes, 1099-NEC, at $2,000 or more	The IRS treats it as the owner, not as a company
Multi-member LLC taxed as a partnership	Yes, 1099-NEC, at $2,000 or more	A partnership is not a corporation
LLC that elected to be taxed as an S or C corporation	No, unless it is a law firm	Treated as a corporation; its W-9 shows the election
C or S corporation	No, unless it is a law firm	Payments to corporations are generally exempt
Attorney or law firm, any entity type	Yes, 1099-NEC for fees	The corporate exemption does not apply to legal services
Landlord, individual or partnership	Yes, 1099-MISC box 1, at $2,000 or more	Rent is reported on 1099-MISC, not 1099-NEC
Anyone you paid by credit card, debit card or PayPal	No, not for those payments	The card company or payment app reports them on Form 1099-K
Supplier you bought goods or inventory from	No	Merchandise is not a payment for services
Your employee	No, a W-2	Wages are reported on Form W-2

The W-9 is how you tell the rows apart. The vendor ticks its tax classification on it and gives you its taxpayer ID, so it settles the LLC rows without guessing from the name. Collect it before the first payment, when the vendor still wants to be paid. A vendor that owes you a W-9 and does not send one is subject to backup withholding: you hold back 24% of each reportable payment and send it to the IRS.

What is the new 1099 rule for 2026?

The threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000 under the One, Big, Beautiful Bill Act, for payments made after December 31, 2025. The IRS instructions say the figure may be adjusted for inflation from 2027. A few payments keep their own thresholds: royalties at $10, and gross proceeds paid to an attorney at $600.

Two things follow for the books:

• The forms due in early 2026 still used $600, because they covered payments made in 2025. If you are catching up on a 2025 filing, use the old figure.
• Fewer small vendors cross the line. A handyman paid $1,400 for two jobs in 2026 gets no form. You still keep the invoice and the payment record, because the expense still has to be supported.

The year-end side of this, including the 1099-K change for payment apps, is in step 9 of the year-end bookkeeping checklist.

The 1099 deadlines for payments made in 2026

January 31, 2027 is a Sunday. The IRS moves a deadline that lands on a weekend to the next business day, so most of these dates fall on Monday, February 1.

Form	Copy to the payee	Filed with the IRS
1099-NEC (contractors)	Feb 1, 2027	Feb 1, 2027, on paper or electronically
1099-MISC (rent, other income)	Feb 1, 2027*	Mar 1, 2027 on paper; Mar 31, 2027 electronically

*Later if box 8 or 10 is used: substitute payments, or gross proceeds paid to an attorney. Form 1099-NEC has no automatic extension. Form 8809 can ask for more time to file with the IRS, but it is not granted automatically for the NEC.

If you file 10 or more information returns in total for the year, W-2s included, you must file them electronically. QuickBooks Online and most payroll services e-file for you. Filing yourself through the IRS’s IRIS portal needs a Transmitter Control Code, which is worth applying for in November.

Can I send a 1099 after January 31?

Yes, and you should: a late form costs less than a missing one.

What is the penalty for filing a 1099 late?

The penalty is per return and grows with how late it is. For information returns due in 2026, the IRS lists (information return penalties, read October 18, 2026):

Filed	Penalty per return
Within 30 days of the due date	$60
31 days late through August 1	$130
After August 1, or not filed	$340
Intentional disregard	$680

The penalty for the payee’s copy is a separate one, so a form that is late to both the contractor and the IRS can be charged twice. The IRS had not published the figures for returns due in 2027 when this was written; they are adjusted for inflation each year.

What to do in the books, starting now

The rules above take ten minutes. The work is in the vendor records, and it is far easier in October than in the last week of January.

1. Collect a W-9 from every vendor you pay for services

Start with anyone paid by check or bank transfer this year. Keep the form with the vendor in QuickBooks Online, not in an email thread. The W-9 gives you the legal name, the taxpayer ID and the tax classification, which are the three things the 1099 needs and the three things most often wrong.

2. Mark each 1099 vendor in QuickBooks Online

In QuickBooks Online, contractors live under Expenses & Bills, then Contractors. A contractor added there is tracked for 1099s, and QuickBooks records their payments as you go (Intuit: set up contractors to track 1099s). A vendor set up somewhere else that should get a 1099 needs the same setting, or it will not appear when you prepare the forms.

3. Check how each payment was recorded

QuickBooks leaves card and payment-app payments, such as PayPal or Venmo, out of the 1099 totals automatically, because the payment company reports them (Intuit: create and file 1099s). That only works if the payment was recorded as a card payment. A card payment entered as a check from the bank account will be counted, and a check entered against a card account will be missed. Run the 1099 Transaction Detail Report and filter it by contractor to see which payments are being counted (Intuit: create 1099 reports).

4. Map the accounts to the right box

When you prepare 1099s (Expenses & Bills, then 1099s), QuickBooks asks which expense accounts hold 1099 payments and which box each one goes in: contract labor and legal fees to 1099-NEC box 1, rent to 1099-MISC box 1. A contractor paid from an account you did not select will show a lower total than they actually received. Review the reportable total for each contractor before you file (Intuit: create and file 1099s with QuickBooks Online).

5. Compare the totals with the contractor’s own invoices

For each contractor near or above $2,000, the total in QuickBooks should match what they billed. A mismatch usually means a payment coded to the wrong vendor or a duplicate. Fix it now, because a corrected 1099 is a second filing.

Common questions about sending 1099s

Do I have to send a 1099 to every vendor?

No. Most vendors never get one: corporations (other than law firms), anyone paid only by card or payment app, suppliers of goods, and anyone paid less than $2,000 for the year. The W-9 tells you which group a vendor is in.

Do I have to issue a 1099 to my handyman?

Only if the work was for the business. A handyman who repaired your rental unit or your shop and was paid $2,000 or more in 2026 by check or transfer gets a 1099-NEC, unless the handyman works through a corporation. Repairs to your own home are personal payments, and the IRS instructions say personal payments are not reportable.

How much can I pay someone without a 1099?

Up to $1,999.99 in total during 2026, if the payment was for services. Below the threshold there is no form, but the expense still needs an invoice or receipt and a payment record in the books. The contractor still owes tax on the income either way.

Can I send the 1099 to the contractor by email?

Yes, if the contractor agreed to receive it electronically and has not withdrawn that consent (IRS General Instructions for Certain Information Returns). Without that consent, the payee copy goes on paper. The IRS copy is filed separately, on paper or through e-filing.

Can I get in trouble for not sending a 1099?

The cost is the per-return penalty in the table above, charged once for the IRS copy and once for the contractor’s copy. Intentionally ignoring the requirement carries a higher penalty with no annual cap. If you missed a form, file it late rather than skip it.

When the vendor records are not there

A 1099 list is only as good as the year of bookkeeping under it. If the books are months behind, the payments are in the bank statements but not against the right vendors, and no report will produce a correct list until the months are entered. Catch-up bookkeeping rebuilds them from the statements, vendor by vendor, which is the list your 1099s are filed from. What your preparer needs on top of that is in what your CPA needs at year end.

$99per month of backlog20% off 6+ months

When to hand this off: if the books are more than two months behind in January, or contractor payments were recorded without vendor names, the 1099 totals cannot be trusted until those months are entered. A free file review counts the months before anything is quoted, and catch-up bookkeeping has the full scope.