Paid a contractor? Check whether a 1099-NEC may be required.
If you paid a designer, virtual assistant, cleaner, or another independent contractor, you might be wondering what you need to do for year-end. Answer five simple questions about one contractor to see if you need to file a 1099-NEC or what you need to confirm first.
What this covers: common business payments to U.S. independent contractors. This informational quiz does not cover Form 1099-MISC or determine whether a worker should be classified as an employee.
How it works: answer up to five quick questions, then enter your email to see your result and get the printable Who Gets a 1099-NEC? Flowchart (2026 edition).
Key 2026 update: the general federal reporting threshold for nonemployee service payments is $2,000, up from $600 in previous years.
Question 1 of 5
Was this payment made for a business expense?
Consider why you paid them, even if you used a personal bank account or card.
Why this matters: Form 1099-NEC generally applies to payments made in the course of a trade or business. An entirely personal payment falls outside the scope of this form. If you pay a contractor from your personal bank account for work done for your business, the business purpose still matters, even if the account used was personal.
Question 2 of 5
Did this payment cover work or services you received?
Why this matters: contractor service or nonemployee payments may belong on Form 1099-NEC. Parts or materials provided as part of the work may also count. Merchandise-only purchases generally do not.
Question 3 of 5
How did you pay this contractor during 2026?
Who handles the tax paperwork depends on how the money moved.
Why this matters: by IRS rule, credit and debit card charges and platform payments processed as "goods and services" are excluded from Form 1099-NEC. Those payment types belong to the Form 1099-K system, so a 1099-NEC for them would report the same income twice. The exclusion applies whether or not the contractor ever receives a 1099-K. Direct funds are yours to count, and Zelle counts as direct here: it moves money straight between bank accounts, so no processor is reporting it for you. A payment whose method you cannot verify, including a friends-and-family transfer, counts here, because no processor is reporting it on your behalf.
Question 4 of 5
Did you pay this contractor at least $2,000 directly in 2026?
Add up all cash, checks, ACH, wires, and bank-to-bank transfers such as Zelle you sent to this contractor in 2026. Exclude card payments or payments made through platforms marked as "goods and services." If you cannot confirm how a payment was processed, count it as direct.
Why this matters: the general 2026 threshold is $2,000 per contractor for the calendar year. If you are below it now, update your total through December 31 before making your final filing decision.
Question 5 of 5
How is the contractor classified on their W-9?
Check line 3a on their completed Form W-9. Their federal tax classification makes the final call.
Why this matters: corporations are generally exempt from receiving Form 1099-NEC. Attorney fees are an exception and may require a 1099-NEC even if the attorney is a corporation. "LLC" in a company name does not determine federal tax classification. Refer to line 3a of the W-9 to confirm if the contractor is Individual/sole proprietor, C corporation, S corporation, Partnership, Trust/estate, or an LLC marked C, S, or P. If line 3a is marked "Other (see instructions)," consult a tax professional. If the W-9 is incomplete or unclear, request a fully completed W-9 from the contractor.
One more thing
Is this a lawyer, law firm, or other legal services provider?
Why this matters: legal services are the exception. Attorney fees of $2,000 or more get a 1099-NEC even when the law firm is a corporation.
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Action Required
Yes. You need to file a Form 1099-NEC.
Based on your answers, this payment meets the 1099-NEC reporting tests.
Why
This was a business expense for services, paid directly by cash, check, or bank transfer. The total reached the $2,000 threshold for 2026, and the contractor is not an exempt corporation.
Your next steps
Confirm you have their completed and signed W-9 on file, with their current legal name, address, and taxpayer identification number.
Add up all direct payments you made to this contractor in 2026, but do not include card transactions or platform payments processed as goods and services. If you cannot confirm a payment, include it to be safe. If you are unsure what to leave out, ask a tax professional.
Remember, your deadline is Monday, February 1, 2027, since January 31 falls on a Sunday. That is when 1099-NEC forms for 2026 payments are due.
Tired of doing this manually every January? The 1099-NEC Contractor Kit tracks contractor payments year-round, separates card charges from eligible payments, flags anyone nearing $2,000, and provides ready-to-send email templates for missing W-9s. Get the 1099-NEC Contractor Kit
Action Required
Yes. You need to file a Form 1099-NEC.
Based on your answers, this payment meets the 1099-NEC reporting tests.
Why
This payment was a business expense for legal services, paid directly by cash, check, or bank transfer, and the total reached the $2,000 threshold for 2026. Legal services are an exception to the corporation rule. Attorney fees of $2,000 or more require a Form 1099-NEC, even if the law firm is a corporation.
Your next steps
Confirm you have the firm's completed and signed W-9 on file, with their current legal name, address, and taxpayer identification number.
Add up all direct payments you made to the firm in 2026, but do not include card transactions or platform payments processed as goods and services. If you cannot confirm a payment, include it to be safe. If you are unsure what to leave out, ask a tax professional.
Remember, your deadline is Monday, February 1, 2027, since January 31 falls on a Sunday. That is when 1099-NEC forms for 2026 payments are due.
Please note, these instructions only apply to fees paid for legal services. Settlement funds handled by an attorney follow different rules under Form 1099-MISC, which are not covered here. Ask a tax professional for help with those situations.
Tired of doing this manually every January? The 1099-NEC Contractor Kit tracks contractor payments year-round, separates card charges from eligible payments, flags anyone nearing $2,000, and provides ready-to-send email templates for missing W-9s. Get the 1099-NEC Contractor Kit
No Filing Required
No 1099-NEC needed from you.
These payment types sit outside your 1099-NEC, by IRS rule.
Why
Payments made by credit or debit card, including a card used through Apple Pay, and PayPal or Venmo payments processed as "goods and services" are subject to the processor's Form 1099-K rules. IRS instructions exclude these payment types from Form 1099-NEC to prevent duplicate income reporting. This exclusion is determined by payment type and applies regardless of whether the contractor receives a 1099-K.
Important caution
This exclusion applies only to the card and goods-and-services transactions. Any additional payments made by check, cash, or bank transfer must be counted separately. If these direct payments reach $2,000 in 2026, you may need to file a 1099-NEC for that amount; the contractor's W-9 classification makes the final call, so take this quiz again counting only your direct payments. For example, if you paid $4,000 by check and $2,500 by card, only the $4,000 is reported on the 1099-NEC.
Mixed payment methods are exactly where the 1099-NEC season gets messy. The 1099-NEC Contractor Kit organizes each payment as you log it, so you always know what counts toward the $2,000 threshold and what is reported by the processor. Get the 1099-NEC Contractor Kit
No Filing Required
No 1099-NEC needed.
Personal household payments are exempt from 1099-NEC reporting.
Why
1099-NEC reporting rules apply only to payments made in the course of operating a trade or business. Hiring someone for personal or household help, such as child care, private house cleaning, or work on your own home, does not require a Form 1099-NEC.
One distinction to watch
If the same person also does work for your business, those business payments need to be tracked separately. The Kit below helps you manage this distinction. One more note: regular household help can sometimes make you a household employer, which is a different topic; a tax professional can tell you if that applies.
Running a home-based business blurs lines fast. The 1099-NEC Contractor Kit maintains a clear, separate record of every business payment, so the business side of your records stays organized. Get the 1099-NEC Contractor Kit
No Filing Required
No 1099-NEC needed.
Buying products alone is not nonemployee compensation.
Why
Form 1099-NEC records payments for labor, expertise, and services. Invoices that cover only merchandise, equipment, inventory, or raw supplies do not require one.
Important caution
If someone billed you for both labor and materials on the same job, payment for the services generally includes parts and materials that were incidental to the work, and that payment counts toward the $2,000 threshold.
Paying the same person for both work and supplies? The 1099-NEC Contractor Kit logs each payment on its own row, so you can log the service payments that count and keep merchandise-only purchases out of your 1099-NEC totals. Get the 1099-NEC Contractor Kit
No Filing Needed Yet
Under $2,000. Keep tracking.
You do not need to file at this time. Your final filing requirement will depend on your total payments at year-end.
Why
For 2026 payments, you are required to file a 1099-NEC only if your direct payments to a contractor reach $2,000 or more in the calendar year. If your direct-payment total is $1,999.99 or less, no filing is needed. Payments between $600 and $1,999.99 needed a 1099-NEC for 2025 payments but do not for 2026. If you are unsure of your total, review your payments now before January.
What to watch out for
One additional payment before year-end could put a contractor over the $2,000 threshold. The payment date, not the invoice date, determines reporting. Many business owners are caught off guard when they stop tracking payments too early in the year.
Taking this after the year ended?
If so, your 2026 payments total is final. If your 2026 payments to this person stayed under $2,000, you don't need to file a 1099-NEC for 2026. For next year, start tracking payments from day one so you're ready when the following January comes. Note: the IRS may change the 1099-NEC reporting thresholds for future years.
Best practice
Always collect a completed Form W-9 before you make the first payment to any contractor, even if you expect to pay them less than $2,000. Collecting it up front saves you a January scramble.
Do not rely on memory or scattered bank statements. The 1099-NEC Contractor Kit keeps a running total for every contractor and flags the moment anyone crosses $2,000. Get the 1099-NEC Contractor Kit
No Filing Required
No 1099-NEC needed.
Payments to corporations are generally exempt from 1099-NEC reporting.
Why
Payments to a corporation, including an LLC classified as a C or S corporation on its W-9, generally do not require a Form 1099-NEC. The main exception is legal services, which you stated does not apply here.
Maintain your records
Keep their signed W-9 and your payment records. The W-9 showing their corporate classification documents why no form was issued. If their classification changes, your reporting requirement may change as well.
Paying several people? The 1099-NEC Contractor Kit records each contractor's W-9 response and running total in one place, so you never have to rely on memory. Get the 1099-NEC Contractor Kit
Action Required Now
You need a completed W-9 before you can decide.
Without a clear answer on line 3a of Form W-9, there is no reliable way to know your reporting duty.
Why
A contractor's business name or invoice does not tell you how they file taxes. A business with "LLC" in its name could be a sole proprietorship, a partnership, or an exempt corporation. If you paid them $2,000 or more in direct funds during 2026, you cannot assume they are exempt. The same applies when their W-9 shows a classification you do not recognize: ask them to clarify line 3a rather than assume. Contractor based outside the U.S.? This check does not cover foreign contractors, who typically give a W-8 series form such as W-8BEN instead of a W-9. Ask a tax professional before requesting a W-9.
Your immediate steps
Request or clarify their W-9 now. Have them send you their Form W-9 today or ask them to send a corrected W-9, and obtain it before making further payments.
Review line 3a when it comes back. If line 3a shows Individual/sole proprietor, partnership, trust/estate, or LLC marked P, a 1099-NEC is usually required. If it shows C corporation, S corporation, or LLC marked C or S, one generally is not, unless they provide legal services.
Be aware of the backup withholding rule. If a contractor does not provide a taxpayer identification number, IRS rules may require you to withhold 24 percent of their payments.
Struggling to get contractors to respond? The 1099-NEC Contractor Kit includes six ready-to-send W-9 emails, a year-end catch-up set and an onboarding set, ranging from friendly first request to firm final notice, so you get the form back quickly. Get the 1099-NEC Contractor Kit
One Number Missing
You are two steps away from your answer.
Your answers so far indicate you may need to file a 1099-NEC. Your filing requirement now depends on your total payments to this contractor in 2026.
Why
You told us this was a business payment for services, and at least part of it was paid directly. The next step is to determine the total amount paid. Include all cash, checks, ACH, wires, and bank-to-bank transfers such as Zelle sent to this contractor in 2026, including any unverified payments. Exclude card payments and platform payments processed as "goods and services."
Your next steps
Calculate your total payments for the year using your bank statements or bookkeeping records.
If your total is less than $2,000, you do not need to file a 1099-NEC for 2026. Continue to update your total through December 31.
If your total is $2,000 or more, retake this quiz with your updated amount and answer the final question about the W-9 to complete the process.
This is the question your records should answer in seconds. The 1099-NEC Contractor Kit keeps a running total of eligible payments for every contractor, so you are never guessing in January. Get the 1099-NEC Contractor Kit
Outside This Check
This check covers service payments.
Your payment may follow different rules that this quiz does not cover.
Why
This informational quiz is built for payments to independent contractors for work or services. Other kinds of payments, such as rent to a landlord or prize money, follow their own reporting rules, often on Form 1099-MISC, which this quiz does not cover. If you are not sure which category your payment falls into, a tax professional can sort it out quickly.
Do you also pay independent contractors? The 1099-NEC Contractor Kit tracks those payments all year, separates card charges from eligible payments, and flags anyone approaching $2,000. Get the 1099-NEC Contractor Kit