How to Create and Send a 1099 Form to Your Contractor

What you need to do before you create a 1099

You create a 1099 when you have paid someone who is not your employee at least $600 in a calendar year. The person you paid must give you their name, address, and tax ID number (either a Social Security number or an Employer Identification Number). You cannot file a 1099 without this information, and you cannot guess or use a partial number.

Before you start filling out the form, confirm with the person you paid that you have their correct legal name and tax ID. A mismatch between the name and number on the 1099 will cause problems when they file their taxes, and it creates extra work for both of you. Ask them directly — do not assume you have it right from a check or invoice.

You also need to know the total amount you paid them during the calendar year. This is the sum of all payments, whether by check, bank transfer, credit card, or cash. If you used a payment processor like PayPal or Square, those platforms track the total for you and may send you a 1099 automatically if the threshold is met.

Key Takeaways

• You must issue a 1099 to any non-employee contractor you paid $600 or more in a single calendar year.
• You need the contractor's legal name, complete tax ID number, and mailing address before you can create the form.
• Form 1099-NEC is for non-employee compensation (freelancers, consultants, vendors); Form 1099-MISC is for other types of payments like rent or royalties.
• You must send Copy B to the contractor by January 31 and file Copy A with the IRS by the same important date.
• If you use accounting software or a payroll service, they often generate and file 1099s for you.

Choosing the right 1099 form for the payment type

The most common form is 1099-NEC (Nonemployee Compensation). Use this when you paid someone for services — a contractor, consultant, freelancer, or vendor who provided work or goods. This is the form most small business owners need.

1099-MISC (Miscellaneous Income) covers other types of payments: rent paid to a landlord, royalties, prizes, or awards. If you are unsure which form applies, the IRS website lists the payment types for each form. Using the wrong form will not prevent filing, but it may confuse the recipient's tax return.

If you used a third-party payment processor (PayPal, Square, Stripe, Venmo for business), that platform may issue the 1099 on your behalf. Check your account settings or contact the processor to see whether they are handling it. If they are, you do not need to create one yourself — but you should still verify the amount they report is correct.

How to fill out a 1099-NEC step by step

You can order blank 1099 forms from an office supply store, read them free from the IRS website, or use tax software that generates them for you. The software route is fastest and least error-prone if you have multiple contractors.

If you are filling out the form by hand or in a PDF, here is what goes in each box:

• Box 1a (Nonemployee Compensation): The total amount you paid the contractor during the year. Do not include expenses they reimbursed you for or amounts you withheld for taxes.
• Your name and address (top left): Your business name and mailing address.
• Your tax ID (top left): Your EIN or SSN, depending on your business structure.
• Contractor's name and address (top right): Their legal name and mailing address, exactly as it appears on their tax return.
• Contractor's tax ID (top right): Their SSN or EIN. This must match their name or the IRS will flag it.
• Account number (optional): You can include an internal reference number if you track multiple contractors.

Leave all other boxes blank unless you withheld federal income tax (which is rare for 1099 contractors) or the contractor is in a specific industry like fishing or attorney fees. The IRS instructions for Form 1099-NEC explain what each box means if you need to use additional fields.

Sending the form to your contractor and the IRS

You must send Copy B of the 1099 to the contractor by January 31 of the year after payment. Mail it to the address they provided, or deliver it by hand if you prefer. The contractor needs this copy to file their own tax return.

You must file Copy A with the IRS by the same January 31 important date. You can mail it with a Form 1096 (a cover sheet that summarizes all your 1099s), or you can file electronically through the IRS FIRE system (Filing Information Returns Electronically) if you have multiple forms. The IRS website has instructions for both methods.

Keep Copy C for your records. Store it with your business tax documents for at least three years in case the IRS asks questions about the payment.

Using tax software or a payroll service to generate 1099s

If you use accounting software like QuickBooks, FreshBooks, or Wave, you can enter contractor payments as you make them, and the software will generate 1099s automatically when you are ready to file. You then print and mail the forms, or the software can file them electronically for you (usually for a small fee).

If you use a payroll service like Guidepoint or ADP, they often handle 1099 generation and filing as part of their service. Check your account or call them to confirm whether they are issuing 1099s on your behalf and whether you need to do anything else.

Using software is worth the cost if you have more than two or three contractors, because it reduces the chance of errors and keeps your records organized. The software also reminds you of the January 31 important date so you do not miss it.

What to do if you miss the important date or make a mistake

If you miss the January 31 important date, file as soon as you realize the error. The IRS assesses penalties for late filing, but the penalty is smaller if you file within 30 days than if you file much later. Contact the IRS or a tax professional for guidance on your specific situation.

If you discover an error after you have already sent the form to the contractor and the IRS, you can file a corrected 1099 (marked "CORRECTED" at the top). Send the corrected copy to the contractor and file Copy A with the IRS. Do not just send a new form without marking it as corrected, because that creates confusion about which version is valid.

If the contractor tells you that the amount on the 1099 is wrong, ask them to show you the documentation (invoices, receipts, or payment records). If they are right, issue a corrected form. If you disagree, document your records and keep them in case the IRS asks.

Frequently Asked Questions

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

No. The threshold is $600 per contractor per calendar year. If you paid someone $550, you do not have to issue a 1099. However, you still have to report the payment on your own tax return as a business expense.

What if the contractor does not give me their tax ID?

You cannot file the 1099 without it. Ask them again in writing (email is fine) and keep a record of your request. If they still refuse, you may have to report the payment to the IRS without a matching tax ID, which flags it for review. Most contractors will provide the number once they understand you need it to file.

Can I send the 1099 electronically instead of by mail?

Yes, if the contractor agrees to receive it electronically. You must get their written consent first (email counts). If they do not consent, you must mail a paper copy. The IRS does not require paper, but the contractor may prefer it.

What if I paid a contractor through a payment app like Venmo or PayPal?

The payment app may issue the 1099 for you if the total meets the threshold. Log into your account and check whether a 1099 has been generated. If the app is handling it, you do not need to create one yourself. If it is not, you still have to issue one based on your records of what you paid.

Do I need to issue a 1099 to a business or just to individuals?

It depends on the business structure. If you paid a sole proprietor or a single-member LLC, you issue a 1099. If you paid a corporation or a partnership, you generally do not. Ask the contractor what their business structure is if you are unsure.