Form 1099-NEC for 2026: the new $2,000 rule, and what to do with yours

Form 1099-NEC is the form a business sends you when it paid you as a freelancer or contractor instead of as an employee. For work paid in 2026, a client only has to send one if it paid you $2,000 or more during the year. That's up from $600, the limit for decades. Whether or not a form arrives, all of your self-employment income is taxable.

Payments made in	Client sends a 1099-NEC at	Due to you and the IRS by
2025	$600	February 2, 2026
2026	$2,000	February 1, 2027
2027	$2,100	January 31, 2028

The law sets a January 31 deadline, which moves to the next business day when it falls on a weekend. The $2,000 limit is adjusted for inflation from 2027, which is where the $2,100 for 2027 comes from.

What the boxes mean

The December 2026 version of the form has a few new boxes. Here's what each one means for you:

• Box 1a, nonemployee compensation: the total the client paid you for your work in 2026. This is the number that matters.
• Box 1b, cash tips: new for 2026. It shows how much of box 1a was tips, for the new tips deduction.
• Box 1c, tipped occupation code: new for 2026. It's a Treasury code for the kind of tipped work you did.
• Box 1d, overtime: new for 2026. It's the extra half of time-and-a-half pay, and it rarely applies to contractors.
• Box 2, direct sales checkbox: this is ticked if you bought $5,000 or more of products from them to resell. It holds no dollar amount.
• Box 4, federal income tax withheld: usually empty. A client withholds 24% only when you didn't give them your Social Security number or EIN. If there's an amount here, you get credit for it on your return.
• Boxes 5 to 7: state tax details.

Why you might not get one

You might not get a 1099-NEC for 2026 even though a client paid you:

• They paid you less than $2,000. That's the most common reason for 2026. Small clients who used to send a form at $600 won't have to.
• They paid by card or through a payment app, such as PayPal for goods and services. Those payments are reported on Form 1099-K by the payment company instead. The client isn't supposed to send a 1099-NEC for them, and the payment company sends a 1099-K only above its own limits.
• You operate as a corporation, including an LLC taxed as an S or C corporation. Payments to corporations are generally exempt, except for legal and medical services.
• The payment wasn't for their business. A neighbor who pays you to fix their kitchen doesn't send one.

None of this changes what you owe. The IRS says to report all your income, including amounts with no form behind them.

What to do with a 1099-NEC

1. Check box 1a against your records. Clients report what they paid in the calendar year. A December invoice paid on January 5 belongs to next year's form. If the amount is wrong, ask the client for a corrected form. Don't wait to file, though. Report the right amount and keep your invoices and bank records.
2. Add up all your business income, not just the forms. Everything goes on Schedule C line 1 as gross receipts. That includes 1099-NEC amounts, 1099-K amounts and income nobody sent a form for. Count each payment once. If a client paid through a payment app and sent a 1099-NEC, it shouldn't land on two forms, so don't add it twice.
3. Subtract your expenses. What's left is your profit, and you owe self-employment tax of 15.3% on it, on top of income tax.
4. Keep the form; don't mail it. You don't attach a 1099-NEC to your return. The IRS already has its copy and matches it against what you report.

If you hire contractors yourself

If your business paid someone who isn't your employee $2,000 or more for services in 2026, you send them a 1099-NEC:

• Get a Form W-9 before you pay them. It gives you their name, address and taxpayer ID. If they won't provide one, you're supposed to withhold 24% (backup withholding).
• Send it to them and file it with the IRS by February 1, 2027. The IRS's own e-file system, IRIS, is free and takes manual entry or a CSV upload. You need an IRIS account first, so don't leave the setup until January.
• You must e-file once you have 10 or more information returns in total. That counts 1099s of every kind together, plus W-2s.
• Skip anyone you paid by card or through a payment app. The payment company reports those payments. Payments to corporations are generally exempt too, except for lawyers and medical providers.

Keep your own count

Clients make mistakes, and some won't send a form now that the limit is $2,000. The safe approach is to record every payment as it lands and check the forms against that record. In the Paid & Filed workbook, your deposits go on the Transactions tab, either pasted from your bank or from our free bank statement converter. Each 1099 then goes on the 1099 Forms tab when it arrives. The workbook adds any fees a platform kept, so your Schedule C income matches the forms, and it shows how much of each payment to set aside for the IRS.