Enterprise
Individual & Small Business
Contractor payments have their own form, 1099-NEC, and 1099-MISC covers most of the other business payments you may need to report. The two forms have different boxes, different thresholds for a few payment types and, for 1099-MISC, later IRS due dates. Here's how to tell them apart for payments made in 2026.
What is the difference between 1099-NEC and 1099-MISC?
Form 1099-NEC reports nonemployee compensation: payments for services by someone who isn't your employee. In the 2026 version, that goes in box 1a.
Form 1099-MISC reports other kinds of income you pay in your business that aren't for a nonemployee's services, like rent and royalties.
The quick test: were you paying someone to do work for your business? If yes, it's usually 1099-NEC. If you were paying for the use of property, a prize, a royalty or a settlement, it's usually 1099-MISC.
Which payments go on which form?
| Payment | Form and box | Threshold, 2026 payments |
|---|---|---|
| Contractor, freelancer or consultant fees | 1099-NEC, box 1a | $2,000 |
| Attorneys' fees for legal services | 1099-NEC, box 1a | $2,000 |
| Commissions and referral fees to non-employees | 1099-NEC, box 1a | $2,000 |
| Office, equipment or land rent | 1099-MISC, box 1 | $2,000 |
| Royalties | 1099-MISC, box 2 | $10 |
| Prizes and awards not for services; other income | 1099-MISC, box 3 | $2,000 |
| Federal income tax withheld (backup withholding) | Box 4 on either form | Any amount withheld |
| Medical and health care payments | 1099-MISC, box 6 | $2,000 |
| Gross proceeds paid to an attorney (for example, a settlement) | 1099-MISC, box 10 | $600 |
| Cash paid for fish bought for resale | 1099-MISC, box 11 | $600 |
| Direct sales of consumer products for resale | 1099-NEC box 2 or 1099-MISC box 7 | $5,000 |
For payments made in 2025, the $2,000 figures were $600. Sources: Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026); IRC §§6041, 6045(f), 6050N.
The 2026 forms also have new boxes for tips and overtime reporting (1099-NEC boxes 1b–1d; 1099-MISC boxes 13a, 13b and 14). Most small businesses paying contractors won't use them.
What are the tricky cases?
Attorneys can land on either form. Fees for legal services you received go on 1099-NEC at $2,000. A settlement or other gross proceeds paid to an attorney, where you can't tell how much is their fee, goes on 1099-MISC box 10 at $600. Both are reportable even if the law firm is a corporation.
Rent vs services. If you rent a machine with an operator, the instructions say to split the payment: the machine rental on 1099-MISC box 1 and the operator's charge on 1099-NEC box 1a.
Rent paid through an agent. If you pay rent to a real estate agent or property manager, you don't file a 1099-MISC. The agent reports the rent paid over to the owner.
Parts and materials. If you pay a service provider and the parts are incidental to the service (for example, a repair), report the whole amount as nonemployee compensation. Pure merchandise purchases aren't reported.
Prizes to non-employees. A prize for a contest that isn't payment for services goes on 1099-MISC box 3. Prizes and awards to employees go on Form W-2.
Unaccounted travel reimbursements. A travel reimbursement that a contractor didn't account for to you counts toward nonemployee compensation, together with their fee.
Are the due dates different?
Yes. For payments made in 2026:
| 1099-NEC | 1099-MISC | |
|---|---|---|
| Copy to recipient | February 1, 2027 | February 1, 2027 (February 16, 2027 if box 8 or 10 has an amount) |
| Filed with the IRS on paper | February 1, 2027 | March 1, 2027 |
| Filed with the IRS electronically | February 1, 2027 | March 31, 2027 |
| Automatic 30-day filing extension (Form 8809) | Not available | Available |
The 1099-NEC has one date for everything and no automatic filing extension, which is why it's the one to plan for. These dates reflect the next-business-day rule applied to the statutory January 31, February 15, February 28 and March 31 dates.
If you file 10 or more information returns in total for the year, counting W-2s and all 1099s together, you generally must e-file. Beginning with tax year 2026, IRS e-filing goes through IRIS, according to Pub. 1099 (2026). See the full 1099 filing guide for details.
Do corporations get either form?
Generally not, but the exceptions differ by form. Payments to a corporation, including an LLC taxed as a corporation, are generally exempt. The main exceptions: attorneys' fees (1099-NEC) and gross proceeds to attorneys (1099-MISC box 10), medical and health care payments (1099-MISC box 6), cash for fish bought for resale, and certain substitute payments reported by brokers. See Do I Send a 1099 to an LLC? for how entity type works.
How do I avoid picking the wrong form?
- Collect a Form W-9 before you pay. You'll need the TIN either way.
- Label payments by type in your books (services, rent, royalties, legal) so the year-end totals sort themselves.
- Separate card and payment-app payments. Those go on 1099-K from the processor, not on your NEC or MISC. See PayPal, Venmo, Zelle and Cards: Who Files the 1099?
- Run each payee through our 1099 checker, which returns the form and box for the payment type you choose, plus the due dates.
Our free Contractor Payment Tracker + 1099 Readiness Sheet does step 2 for you: it picks the likely form from the payment type. If you'd prefer to hand it off, RAHA's per-form 1099 filing service handles W-9 review, preparation, e-filing and recipient copies, with the price quoted upfront. See our bookkeeping services.
Frequently asked questions
Can I report contractor payments on 1099-MISC instead of 1099-NEC?
No. Nonemployee compensation goes on 1099-NEC, box 1a. Using the wrong form can mean a corrected return later.
Do I file 1099-NEC for a contractor I paid $1,500 in 2026?
Not federally, because the 2026 threshold is $2,000. Some states use a lower figure, so check your state.
Does 1099-MISC have a $2,000 threshold too?
For most boxes, yes, for 2026 payments. Royalties stay at $10 and gross proceeds paid to attorneys stay at $600.
Is there a 1099-NEC extension?
There's no automatic 30-day extension for 1099-NEC. Pub. 1099 (2026) says to see Form 8809 for the limited extension options.
Where does backup withholding go?
In box 4 of whichever form you're filing. The backup withholding rate is 24%.
Do I need to file both forms for the same person?
Possibly. If you paid the same person for services and also paid them rent, you'd file a 1099-NEC for the services and a 1099-MISC for the rent, each if it meets its threshold.
Sources
- IRS, Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026): https://www.irs.gov/pub/irs-pdf/i1099mec.pdf
- IRS, Publication 1099 (2026): https://www.irs.gov/pub/irs-pdf/p1099.pdf
- IRC §6041: https://www.law.cornell.edu/uscode/text/26/6041
- IRC §6050N: https://www.law.cornell.edu/uscode/text/26/6050N
This guide provides general information for educational purposes and is not tax, legal or accounting advice. Consult a qualified professional before acting.