How To Issue a 1099 Form to a Contractor

What you need to do to issue a 1099 to a contractor

You issue a 1099 by filing it with the IRS and sending a copy to the contractor. The form you use depends on the type of payment: Form 1099-NEC for nonemployee compensation (most common for contractors), Form 1099-MISC for miscellaneous income like rent or royalties, or other 1099 variants for specific payment types. You must file with the IRS by January 31 of the year following payment, and send the contractor their copy by the same date. The contractor needs this form to report their income on their tax return.

You are required to issue a 1099 if you paid a contractor (not an employee) $600 or more in a calendar year for services. This threshold applies to most 1099-NEC situations. Some payment types have different thresholds — for example, attorney fees on Form 1099-MISC have a $600 threshold, but payments to corporations generally do not require a 1099 at all.

Key Takeaways

• You must issue a 1099-NEC to any nonemployee contractor you paid $600 or more during the calendar year for services.
• File the form with the IRS and send a copy to the contractor by January 31 of the following year.
• You need the contractor's name, address, and Tax Identification Number (usually their Social Security Number or EIN) before you can complete the form.
• The IRS matches 1099s filed by businesses against tax returns filed by contractors, so accuracy in names and numbers is critical.
• Penalties explore if you file late, file with incorrect information, or fail to file when required.

Gather the contractor's information before you file

Before you can issue a 1099, you need the contractor's Tax Identification Number (TIN). For most individuals, this is their Social Security Number (SSN). For businesses, it is their Employer Identification Number (EIN). Ask the contractor to complete Form W-9 (Request for Taxpayer Identification Number and Certification), which collects their name, address, TIN, and business structure. Keep the W-9 on file for your records — you do not file it with the IRS, but you must have it before issuing the 1099.

If a contractor refuses to provide a W-9 or TIN, you are required to withhold 24 percent of their payments as backup withholding and send that amount to the IRS. This continues until they provide valid information. Request the W-9 in writing and document the request; if the contractor still does not comply, you have a record of your attempt.

Verify the contractor's name and TIN match exactly. The IRS compares the name and number on your 1099 against the contractor's tax return. Mismatches — even small ones like "Robert" versus "Bob" — can trigger IRS notices to both you and the contractor.

Calculate the total amount paid and choose the correct form

Add up all payments you made to the contractor during the calendar year. Include cash, check, credit card, and any other form of payment. Do not include reimbursements for expenses the contractor paid on your behalf (those are not taxable income to the contractor). If the total is $600 or more, you must issue a 1099.

The form you use depends on the type of work or payment. Form 1099-NEC is for nonemployee compensation — this covers most contractor payments for services like consulting, freelance work, repairs, or professional services. Form 1099-MISC is for other types of income: rent paid to a landlord, royalties, prizes, or awards. Form 1099-K is issued by payment processors (like PayPal or Square) when they process credit card or third-party network transactions. If you use a payment processor, they may issue the 1099-K automatically; you still issue a 1099-NEC or 1099-MISC for your own records if required.

If you paid a contractor who is a corporation, you generally do not issue a 1099-NEC, even if the payment exceeds $600. Corporations file their own tax returns and report income differently. Confirm the contractor's business structure on their W-9 before deciding whether to file.

Complete the 1099 form with accurate information

The IRS provides blank 1099 forms and instructions on its website (irs.gov). You can also order pre-printed forms from the IRS or purchase them from tax software providers and office supply stores. The form has boxes for your information (as the payer), the contractor's information (as the recipient), and the payment amount.

Fill in Box 1 with the total nonemployee compensation paid during the year. Some boxes are conditional — for example, if you withheld federal income tax, you report that in a different box. Follow the form instructions for your specific situation. Use the contractor's legal name as it appears on their tax return, not a business name or nickname. Enter their TIN in the space provided.

Print or type clearly. Handwritten forms are accepted but harder for the IRS to process. If you make an error, do not cross it out — obtain a new form and start over. Keep a copy for your records.

File with the IRS and send a copy to the contractor

You file 1099s with the IRS using Form 1096 (Annual Summary and Transmittal of U.S. Information Returns), which is a cover sheet that lists all your 1099s. Attach your 1099 forms to the 1096 and mail both to the IRS address listed in the 1096 instructions. The important date is January 31 of the year following the payment year. For example, payments made in 2024 are reported on 1099s filed by January 31, 2025.

Send Copy B of the 1099 to the contractor by the same January 31 important date. You can mail it or, in some cases, provide it electronically if the contractor consents. Keep Copy C for your records. The contractor uses their copy to report the income on their tax return.

Many tax software providers and payroll services allow you to file 1099s electronically through the IRS e-file system, which can be faster and reduces errors. Check whether your software supports this option.

Understand penalties for late or incorrect filing

The IRS imposes penalties if you file a 1099 late, with incorrect information, or not at all when required. Penalties vary based on how late the filing is and whether the error was intentional. As of recent years, penalties for late filing range from $50 to $280 per form, depending on how many days late and whether you corrected the error. Penalties for intentional disregard are higher.

If you discover an error after filing, you can file an amended 1099 using the same form with "CORRECTED" marked at the top. Send the corrected form to the IRS and the contractor by the same important date as the original (or as soon as you discover the error). Do not straightforward resubmit; the IRS needs to know it is a correction.

Keeping accurate records of contractor payments, W-9s, and 1099s filed reduces the risk of penalties and makes it easier to respond if the IRS questions your reporting.

Frequently Asked Questions

Do I have to issue a 1099 if the contractor is a sole proprietor or LLC?

Yes, if you paid them $600 or more for services and they are not a corporation. Sole proprietors and most LLCs are treated as nonemployee contractors for 1099 purposes. Confirm their business structure on their W-9. If the LLC is taxed as a corporation, you do not issue a 1099.

What if I paid a contractor less than $600 in a year?

You are not required to issue a 1099 if the total is under $600. However, you may still choose to issue one for your own record-keeping. The contractor must still report all income on their tax return, even if you do not issue a 1099.

Can I issue a 1099 electronically instead of mailing it?

You can file with the IRS electronically through approved e-file providers. For sending the copy to the contractor, you may provide it electronically only if they consent in writing. Otherwise, mail a paper copy by January 31.

What happens if a contractor does not provide a W-9?

You must request it in writing and document the request. If they still do not provide it, you are required to withhold 24 percent of their payments as backup withholding and send that to the IRS. This continues until they provide a valid W-9.

Do I issue a 1099 to an employee?

No. Employees receive a Form W-2, not a 1099. A 1099 is only for nonemployees — people who work for you but are not on your payroll and do not receive employee benefits.