- Get a W-9 before the first payment. Without a valid taxpayer ID, you may have to withhold 24% as backup withholding.
- For payments in tax years after 2025, a 1099-NEC is required when you pay a non-employee at least $2,000 in the year for services in your business.
- Send the 1099-NEC to the worker and file it with the IRS by January 31. Payments to most corporations are not reported.
The W-9: get it before you pay
Form W-9 is how a sub or contractor gives you their legal name, business type and taxpayer ID. You keep it; you do not send it to the IRS. Ask for it before the first payment, when you still have leverage, not in January when you need to file.
If a payee does not give you a correct taxpayer ID, you may have to start backup withholding. The IRS's W-9 instructions put the backup withholding rate at 24% of reportable payments.
Who gets a 1099-NEC
You file Form 1099-NEC for each person you paid, in the course of your business, at least the threshold amount in the year for services by someone who is not your employee. That covers most subs, helpers paid as contractors and other service providers.
- The threshold went up. The IRS instructions say that for tax years beginning after 2025, the minimum for reporting these payments increased to $2,000, and it may be adjusted for inflation starting in 2027.
- Corporations are generally exempt. Payments to a corporation, including an LLC taxed as a C or S corporation, generally are not reported. Legal fees are the exception: attorneys' fees of $2,000 or more are reported even when paid to a corporation.
- Employees get a W-2, not a 1099. See 1099 vs W-2.
The deadlines
| What | When |
|---|---|
| Collect the W-9 | Before the first payment |
| Give Form 1099-NEC to the worker | January 31 |
| File Form 1099-NEC with the IRS | January 31, paper or electronic |
If January 31 falls on a weekend or legal holiday, the due date is the next business day. If you file 10 or more information returns in total, the IRS requires you to file them electronically.
Keep it easy in January
- Keep each sub's W-9 with their insurance certificate.
- Record every payment with the sub's name, the job and how you paid.
- Payments you make by credit card or payment card, and through third-party payment networks, are reported by the payment company on Form 1099-K, not by you on a 1099-NEC, according to the IRS instructions.
Our free expense tracker keeps payments by job. Koira's QuickBooks Online integration on the Grow plan keeps your books in step.
Sources
- IRS, Instructions for Forms 1099-MISC and 1099-NEC, checked October 9, 2026
- IRS, Instructions for the Requester of Form W-9, checked October 9, 2026
Published October 1, 2024. This page is general information, not legal or tax advice. Rules change and differ by state and city, so confirm with the agency named before you act.