The simple rule
1099-NEC = payments to contractors for services (labor).
1099-MISC = everything else (rent, prizes, royalties, medical payments).
1099-NEC in detail
Use 1099-NEC to report payments of $600 or more in a calendar year to a non-employee for:
- Services performed by a person or unincorporated business
- Fees, commissions, prizes, awards for services
- Attorney fees (always reported on NEC if for services)
The typical case: you paid a freelance designer $3,000 this year. They get a 1099-NEC.
1099-MISC in detail
Use 1099-MISC for:
- Rents — $600+ paid for office space, equipment rental, etc. (Box 1)
- Royalties — $10+ (Box 2)
- Prizes and awards not for services (Box 3)
- Medical and health care payments — $600+ (Box 6)
- Gross proceeds to an attorney — for legal settlements, not fees (Box 10)
Who you do not send 1099s to
- C-corporations and S-corporations — generally exempt (except attorneys and medical payments)
- Employees — they get a W-2
- Payments via credit card, debit card, or third-party network (PayPal, Stripe, Venmo-business) — the processor issues Form 1099-K instead
- Non-US persons who signed a W-8BEN and are performing work outside the US
If you paid a contractor $5,000 via Stripe, you do not send them a 1099-NEC. Stripe files a 1099-K. If you double-issue, the contractor gets taxed twice on the same income.
Double-issuing is a common error. Only 1099-NEC payments sent via direct bank transfer (ACH), check, or cash.
Deadlines
| Form | To recipient | To IRS |
|---|---|---|
| 1099-NEC | January 31 | January 31 |
| 1099-MISC (no amounts in Box 8 or 10) | January 31 | February 28 (paper) / March 31 (e-file) |
| 1099-MISC (with Box 8 or 10) | February 15 | February 28 / March 31 |
Penalties for missing the deadline
Per missed form:
- Filed within 30 days late: $60
- 31 days late through August 1: $130
- After August 1 or never: $340
- Intentional disregard: $680+
These add up fast if you have 10 contractors and missed the deadline.
How to file (for the payer)
- Collect W-9 from each contractor before paying them
- Track payments through the year
- In January, tally up each contractor's total
- File through a service: QuickBooks, Track1099, Tax1099, eFile4Biz ($2–5 per form)
- Recipient gets a copy. IRS gets a copy. You keep a copy.
If you receive one
Report the income on Schedule C Line 1 (or Line 6 if it's nonstandard income). The 1099 itself doesn't need to be attached — just the income has to match IRS records.
You still have to report income even if the payer didn't send you a 1099. Not getting a 1099 doesn't make the income tax-free. The threshold to file a 1099 is $600 for the payer; the threshold to report income is $0 for you.
We cross-check your contract labor vs 1099 filings.
If your Schedule C Line 11 is $30,000 but you only filed 1099s for $18,000 of it, the gap is an IRS cross-check trigger. We flag it.