Do I have to file Form 1099s in 2024-2025?
- Rebecca Tabert, CPA
- Jul 20
- 10 min read
If you hired contractors, paid vendors, or issued payments outside of payroll, you might need to file a Form 1099. With IRS enforcement ramping up and new digital payment thresholds causing confusion, it is more important than ever to understand your filing obligations.
If you run a business, pay freelancers or contractors, or even rent out property, you may need to file Form 1099s. These forms are how the IRS tracks payments made outside of regular payroll, such as paying a graphic designer, a plumber, or even rent to a landlord. Many small business owners and contractors assume 1099s only apply to big companies, but that is not the case. Even a single payment over a certain amount can trigger a filing requirement.
The rules for filing 1099s have also changed in recent years, especially with more payments being made through apps like Venmo, PayPal, and other online platforms. If you do not know what to file or when, you could face penalties. The good news is that once you understand the basics, staying compliant is straightforward.
What are Form 1099s?
Form 1099s are information returns used to report certain types of payments made outside of payroll. They are filed with the IRS and sent to the recipient to report income that may not otherwise be tracked. There are many types of 1099 forms, but the most common for small businesses and contractors include:
Form 1099-NEC – Used to report payments of $600 or more to non-employees such as independent contractors, freelancers, or other service providers.
Form 1099-MISC – Used for other miscellaneous payments such as rent, legal settlements, prizes, and awards.
Form 1099-K – Used by payment processors (like PayPal, Square, or Venmo) to report payments made through third-party networks. Beginning in 2024 (for the 2025 filing season), the threshold will lower to $5,000, with further changes expected.
Form 1099-INT – Used to report interest income paid to individuals or businesses.
Form 1099-DIV – Used to report dividend payments or distributions to shareholders or investors.
These forms do not calculate tax owed, but they are vital to IRS tracking of income and are matched against tax returns. Not issuing or incorrectly filing a required form 1099 can result in steep penalties.
How do I know if I need to file 1099s and which forms?
You need to file a 1099 form if you paid someone who is not your employee for services, rent, or other reportable payments during the year. The most common situation is paying an independent contractor or vendor more than $600 in a calendar year.
However, the type of form and whether you are required to file depends on a few key factors:
You made payments in the course of your trade or business. Personal payments do not require a 1099.
You paid a person or business that is not a corporation. Most 1099s are issued to individuals or partnerships. However, there are exceptions, for example, payments to attorneys always require a 1099, even if the firm is incorporated.
The payment was $600 or more during the year. This includes cash, checks, direct deposit, or other direct payments.
You paid through third-party platforms. In some cases, if you paid someone through PayPal, Venmo (business account), or a credit card, the payment processor -NOT you-may be responsible for issuing a 1099-K instead.
To determine which forms to file:
Use Form 1099-NEC if you paid $600+ to a contractor for services.
Use Form 1099-MISC for rent, legal settlements, or certain other business payments.
You do not usually file Form 1099-K. Third-party processors do, but these forms may affect your contractor’s reporting and IRS matching.
Request a Form W-9 from each vendor or contractor you work with. This gives you their legal name, taxpayer identification number (TIN), and entity type, so you know if a 1099 is needed.
When in doubt, it is better to verify than to assume. If the payment was business-related and over $600, and the recipient is not a corporation, you likely need to file a 1099.
How did 1099 filing change between 2024 and 2025?
There are several key changes to 1099 reporting that take effect for the 2025 tax year (filed in early 2026). Most notably, these affect Form 1099-K, electronic filing thresholds, and proposed legislation that could reverse new rules.
Lower Form 1099-K Reporting Threshold (Phase-In):
In 2024, the IRS lowered the Form 1099-K threshold from $20,000 (and 200 transactions) to $5,000, regardless of transaction count. For 2025, that threshold lowers again to $2,500. By 2026, the full implementation of the $600 threshold is expected to go into effect unless Congress intervenes.
These rules apply to payments processed by third-party platforms like PayPal, Venmo (business profiles), Stripe, Square, Etsy, and others.
No Changes to 1099-NEC or 1099-MISC Rules:
The rules for Form 1099-NEC and 1099-MISC remain the same for 2025. Businesses must still issue a 1099-NEC for nonemployee compensation of $600 or more, and a 1099-MISC for qualifying rents, legal settlements, and other payments. Deadlines and filing processes have not changed.
Electronic Filing Threshold Now Applies to Most Businesses:
As of 2024 (for 2025 filing), businesses that file 10 or more information returns in total - regardless of form type - are now required to file electronically. This includes all 1099s, W-2s, and similar forms combined. The old 250-return threshold no longer applies.
Possible Legislative Reversal Pending in Congress:
A bill is currently pending in the U.S. Senate to roll back the Form 1099-K changes, potentially restoring the original $20,000 and 200 transaction threshold. This legislation passed the House but is not yet law. If passed in time, it could reverse the upcoming $2,500 and $600 thresholds, so taxpayers should monitor updates.
Increased Scrutiny on Reporting Accuracy:
The IRS continues to focus enforcement efforts on 1099 compliance, especially for small businesses and gig workers. Form mismatches or missing filings can lead to automatic notices and penalties. Even if you do not receive a 1099, you are still responsible for reporting all taxable income.
In summary, the biggest change between 2024 and 2025 is the continued lowering of the Form 1099-K threshold and the requirement to e-file if you are submitting 10 or more forms. These changes affect many small business owners, freelancers, and sellers using online platforms. If you are unsure whether you need to issue or expect a 1099-K or other forms, it is best to consult with a tax professional.
When are Form 1099s due for the 2026 filing season (covering tax year 2025)??
Form 1099s continue to reference payments made from January 1 to December 31, 2025.
During the 2026 filing season (spring 2026), here are the official due dates you need to know:
Form 1099‑NEC (Nonemployee Compensation)
Recipient Copy & IRS Filing: Due January 31, 2026, whether filed on paper or electronically.
Form 1099‑MISC (Miscellaneous Income)
Recipient Copy: Must be furnished by January 31, 2026.
Paper IRS Filing: Due February 28, 2026.
Electronic IRS Filing: Due March 31, 2026.
Other 1099 Forms (e.g., 1099-INT, -DIV, -R):
Follow the same schedule as 1099‑MISC:
Recipient: January 31, 2026
Paper IRS: February 28, 2026
E-file IRS: March 31, 2026
Key Notes
No extensions for recipient copies. You must still send forms to payees by January 31, even if you obtain an IRS extension for filing.
Combined electronic filing rule: If you submit 10 or more total information returns (e.g., W-2s, 1099s), you are required to file electronically via the IRS FIRE/IRIS system.
Calendar-year reporting: All forms cover the full calendar year, no matter your business’s fiscal year.
Why it matters: Missing deadlines can trigger penalties per form, often escalating with the delay. To avoid fines and ensure compliance, collect W-9s and prepare your forms well before January 31, 2026.
What are the steps to filing Form 1099s?
Filing Form 1099s is a process that involves collecting accurate information, meeting deadlines, and following IRS guidelines.
Step 1: Identify who needs a 1099
Review all payments made during the year to vendors, contractors, landlords, and other non-employees.
If you paid $600 or more for services, rent, legal fees, or prizes in the course of business, you likely need to issue a 1099.
Payments made to corporations are often exempt (except for attorneys and a few other categories).
Step 2: Collect and verify W-9 forms
Request a completed Form W-9 from each vendor or contractor before payment is made.
Make sure the name, business type, and Taxpayer Identification Number (TIN) are correct.
A valid W-9 is essential for completing the 1099 and avoiding penalties for missing or incorrect TINs.
Step 3: Track payments by recipient and total
Use your accounting software or payment records to total payments made to each vendor.
Separate payments by type, such as services, rent, or royalties, to determine the correct form (e.g., 1099-NEC vs. 1099-MISC).
Step 4: Choose the correct 1099 form
Use Form 1099-NEC for nonemployee compensation (e.g., freelance work).
Use Form 1099-MISC for rent, prizes, or attorney settlements.
Note that Form 1099-K is issued by third-party payment processors (not by you), but may affect IRS matching.
Step 5: Prepare and file the forms
You can complete 1099s manually, use e-filing software, or work with a tax professional.
If you file 10 or more total information returns, including W-2s, you must file electronically using the IRS FIRE or IRIS system.
Double-check for accuracy. TIN mismatches and name errors are common sources of IRS notices.
Step 6: Deliver copies to recipients and the IRS
Send Copy B to the recipient by January 31, 2026.
File with the IRS:
1099-NEC: Due January 31, 2026 (no extension).
1099-MISC and others:
Paper: Due February 28, 2026
Electronic: Due March 31, 2026
Step 7: Keep records
Maintain copies of filed 1099s and related W-9s for at least four years.
Document your filing method, dates sent, and any communications with vendors or the IRS.
Most common myths about Form 1099s
Myth: I don’t have to file a 1099 if I paid someone by Venmo or PayPal.
Reality: This is only partially true. If you used a personal Venmo account or paid someone via direct transfer (like Zelle), you are likely still responsible for issuing a 1099-NEC. However, if you paid via a business PayPal account or through a platform like Etsy, the platform might issue a 1099-K instead. But that does not eliminate your responsibility to track and report eligible business payments.
Myth: I don’t need to file a 1099 for a business that’s an LLC.
Reality: This is a common misunderstanding. Many LLCs are taxed as sole proprietors or partnerships, which means they do need to receive 1099s if you paid them $600 or more. Only LLCs taxed as corporations are generally exempt, and even then, there are exceptions (e.g., attorneys).
Myth: If I didn’t get a W-9, I don’t need to file a 1099.
Reality: Lack of a W-9 does not exempt you, instead it actually creates more risk. If you cannot get a W-9, you are still required to file a 1099 to the best of your ability and possibly withhold backup withholding (24%) until one is provided. Failing to file due to a missing W-9 can trigger penalties.
Myth: I can file all my 1099s by paper, no problem.
Reality: Starting in 2024, if you are filing 10 or more information returns total (including W-2s, 1099s, etc.), you must e-file. The old rule allowing paper filing for up to 250 forms no longer applies. Filing by paper when e-filing is required can result in rejected forms and penalties.
Myth: I’m a sole proprietor, so I don’t need to worry about 1099s.
Reality: Even if you are a sole proprietor or very small business, if you hire independent contractors, pay rent, or issue any eligible payments, you may be required to issue 1099s. The rules apply to businesses of all sizes, not just corporations or big companies.
(FAQ) Frequently asked questions about Form 1099s
Question: What happens if I forget to file a 1099 or file it late?
Answer: If you forget to file or file after the deadline, the IRS can assess penalties starting at $60 per form and increasing depending on how late you file. If the IRS believes you intentionally disregarded the rules, the penalty can be over $630 per form. Filing as soon as you realize the mistake can reduce the fine.
Question: Do I have to issue a 1099 if I only paid someone once?
Answer: Yes, if the one-time payment was $600 or more and was made in the course of business, you are still required to issue a 1099. It does not matter how many times you paid, only the total amount paid during the calendar year matters.
Question: Do I need to send a 1099 if I paid someone with a credit card?
Answer: No. If you paid someone via credit card or another third-party processor (like PayPal business), you are not responsible for issuing a 1099-NEC. The payment processor is required to issue a Form 1099-K if the thresholds are met.
Question: Can I issue a 1099 without a Social Security Number or EIN?
Answer: You can, but it may require backup withholding if the payee did not provide a valid Taxpayer Identification Number. In that case, you must withhold 24% from payments and remit it to the IRS. You are also required to make a good-faith effort to obtain the TIN using Form W-9.
Question: Do I need to send a 1099 to someone I paid with personal funds?
Answer: No. Form 1099s are only required for payments made in the course of a trade or business. Personal payments, such as paying a friend to help move or reimbursing someone for dinner, do not require a 1099.
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Final Thoughts
Filing Form 1099s may seem overwhelming, especially with new rules, lower thresholds, and tighter filing deadlines. But whether you are a contractor, landlord, gig worker, or small business owner, understanding your 1099 obligations is a key part of staying compliant and avoiding penalties.
The most important steps are to keep good records throughout the year, collect W-9s before making payments, and stay up to date on IRS filing deadlines and electronic requirements. With proper planning and support from a qualified tax professional you can navigate the 2025–2026 filing season with confidence and accuracy.
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