How to Issue a 1099 Form to a Contractor or Freelancer

What you need to do to give someone a 1099

If you paid a contractor, freelancer, or other non-employee more than $600 in a calendar year, you must send them a Form 1099-NEC (for non-employee compensation) or Form 1099-MISC (for miscellaneous income like rent or royalties). You also file a copy with the IRS. The person receiving it needs the form to report their income on their tax return, and the IRS uses it to verify that income was reported.

The important date to send the 1099 to the recipient is January 31 of the year after payment. The important date to file with the IRS is February 28 (or March 31 if you file electronically). You'll also send a Form 1096 — a cover sheet — along with your IRS filing.

Key Takeaways

• You must issue a 1099-NEC if you paid any non-employee more than $600 in a single calendar year for services.
• Send the completed 1099 to the recipient by January 31 and file a copy with the IRS by February 28 (or March 31 if filing electronically).
• You need the contractor's name, address, and tax ID (usually their Social Security number or EIN) before you can complete the form.
• File Form 1096 with the IRS as a cover sheet when you submit your 1099s, whether you file on paper or electronically.
• If you don't have the contractor's tax ID, you must still issue the 1099 but mark it as incomplete and request the number from them.

Gather the contractor's information before you start

Before you fill out a 1099, you need the recipient's legal name, current mailing address, and tax identification number. For most individuals, this is their Social Security number (SSN). For businesses, it's their Employer Identification Number (EIN).

Ask the contractor for this information when you first hire them — don't wait until year-end. Many contractors will give you a Form W-9, which is a straightforward form they fill out that includes their name, address, and tax ID. Keep the W-9 on file. If you don't have their tax ID and can't reach them, you can still file the 1099, but you'll need to mark it as incomplete and continue trying to get the number.

Determine which 1099 form to use

The most common form is 1099-NEC, which you use for payments to contractors for services — writers, consultants, plumbers, designers, and similar work. Box 1 on the 1099-NEC is where you report non-employee compensation.

Use 1099-MISC if you're reporting rent paid to a landlord (Box 1), royalties (Box 2), or other miscellaneous income. If you're unsure which form applies, the IRS instructions for each form spell out the specific income types. Most small-business payments to contractors fall under 1099-NEC.

Fill out the form with payment details

You can order blank 1099 forms from the IRS, buy them from an office supply store, or use tax software that generates them. The form has boxes for your information (as the payer), the recipient's information, and the dollar amounts paid in different categories.

In Box 1 of the 1099-NEC, enter the total amount you paid the contractor for services during the calendar year. Do not include payments for materials or reimbursements — only compensation for work. If you withheld any federal income tax from payments (which is rare for 1099 contractors), that goes in Box 4. Most boxes will be blank for a typical contractor payment.

Make sure your name, address, and tax ID (your EIN or SSN, depending on your business structure) are correct in the payer section. Double-check the recipient's name and address — mismatches can cause problems when they file their return.

Send the 1099 to the contractor and the IRS

Print or obtain two copies of the completed 1099: one to send to the contractor and one to file with the IRS. Send the contractor's copy by January 31 of the following year. You can mail it or, if the contractor has agreed, send it electronically.

To file with the IRS, you have two options: mail paper forms or file electronically. If you're mailing, send Copy A (the IRS copy) of each 1099 along with a Form 1096 cover sheet to the IRS address listed in the 1096 instructions. The postmark important date is February 28. If you file electronically through the IRS e-file system, the important date is March 31.

Keep a copy of each 1099 for your own records for at least three years.

What to do if you don't have the contractor's tax ID

If a contractor refuses to give you their tax ID or you can't reach them, you still need to file the 1099. Mark the form as incomplete (the IRS has a specific way to do this on the form), and continue trying to get the number. Send the incomplete 1099 to the contractor and file it with the IRS as scheduled.

The IRS may impose a penalty on you if you file without a tax ID and don't make a good-faith effort to obtain it. Document your attempts to contact the contractor — emails, letters, or notes about phone calls — in case the IRS asks.

Common mistakes to avoid

Do not issue a 1099 to employees. Employees receive a W-2, not a 1099. A 1099 is only for people who are not on your payroll and are not subject to withholding.

Do not round dollar amounts or estimate payments. Report the exact total you paid. If you paid $600.50, write $600.50, not $600 or $601.

Do not file late. The IRS charges penalties for late 1099 filings, and the contractor may not be able to file their tax return on time if they don't have the form by January 31.

Do not confuse the recipient's copy important date (January 31) with the IRS filing important date (February 28 or March 31). Send the contractor's copy first.

Frequently Asked Questions

Do I have to issue a 1099 if I paid someone less than $600?

No. The threshold is $600 per calendar year. If you paid a contractor $500 total in 2024, you don't have to issue a 1099. However, you still need to report that income on your own tax return if you're self-employed.

What if I paid someone by credit card or PayPal?

If you paid through a payment processor like PayPal, Square, or a credit card company, that processor may issue a Form 1099-K directly to the recipient. You should still issue a 1099-NEC if the payment was for services and meets the $600 threshold, to avoid duplicate reporting issues. Check with your processor about their reporting requirements.

Can I send the 1099 electronically instead of by mail?

Yes, if the contractor has agreed to receive it electronically. You must get their written consent first. You can email it, send it through your accounting software, or use an online platform. The January 31 important date still applies.

What happens if I file the 1099 late?

The IRS charges penalties for late filings. The penalty amount depends on how late you file — it's smaller if you file within 30 days of the important date and larger if you file much later. Penalties can range from $50 to $280 per form, depending on the year and circumstances.

Do I need to file a 1096 if I only have one 1099?

Yes. The Form 1096 is a cover sheet that must accompany your 1099s when you file with the IRS, even if you're only filing one 1099. You do not send the 1096 to the contractor — only to the IRS.