When You Need To Send a 1099 Form To Someone

You send a 1099 when you pay a non-employee for services or products during the year

A 1099 form documents payments you made to someone who is not your employee. The IRS requires you to send one to the person and file a copy with the government if you paid them more than a certain threshold. The threshold depends on the type of payment and the type of 1099 form — it is usually $600, but can be $400 for certain payments or higher for others.

The person receiving the 1099 uses it to report their income on their tax return. You send it to them by January 31 of the year after you made the payment. You also file a copy with the IRS, usually by the same date, though some forms have later important date.

The key distinction is that 1099 recipients are not on your payroll. You do not withhold taxes from their payments, and you do not pay employer taxes on their behalf. If someone is your employee and you pay them a salary or hourly wage, you issue a W-2 instead, not a 1099.

Key Takeaways

• You send a 1099 when you pay a non-employee more than the threshold amount — usually $600 — for services or products in a calendar year.
• The threshold varies by form type: 1099-NEC for non-employee compensation is $600, but 1099-MISC for certain other payments may differ.
• You must send the 1099 to the recipient by January 31 and file a copy with the IRS by the same date, though some forms have later important date.
• Do not issue a 1099 to employees on your payroll — use a W-2 for them instead.
• You need the person's name, address, and tax identification number (usually their Social Security number or EIN) before you can issue a 1099.

The $600 threshold and when it applies

The most common 1099 threshold is $600 per year. This applies to 1099-NEC (non-employee compensation) payments — money you pay to independent contractors, freelancers, consultants, and other non-employees for services. If you pay one person $600 or more in a calendar year for work, you must send them a 1099-NEC.

Other 1099 forms have different thresholds. A 1099-MISC (miscellaneous income) for rent, royalties, or prizes is $600. A 1099-INT (interest income) is $10. A 1099-DIV (dividends) is $10. A 1099-K (payment card transactions) threshold varies by state and year — it was $20,000 and 200 transactions for many years, but the IRS has signaled changes to this rule.

The threshold is per person, per calendar year. If you pay the same contractor $300 in January and $400 in December, that is $700 total, so you issue a 1099-NEC. If you pay five different contractors $500 each, you do not issue any 1099s because each person is below the threshold.

Who counts as a non-employee for 1099 purposes

A non-employee is someone who is not on your payroll and not your employee. This includes independent contractors, freelancers, consultants, vendors, and anyone else you pay for a one-time job or ongoing services without them being a W-2 employee.

Common examples are a plumber you hire to fix a pipe, a graphic designer you pay to create a logo, a bookkeeper you contract with monthly, or a consultant you bring in for a project. You also issue a 1099 to a business (sole proprietorship, LLC, S-corp, or C-corp) if you pay it for services or products and the payment meets the threshold.

Do not issue a 1099 to someone who is your employee, even if they are part-time or seasonal. Do not issue one to a spouse or dependent. Do not issue one to a corporation if you are paying for goods or services in the normal course of business — the rules for business-to-business payments are different and often exempt.

Collecting the information you need before paying

Before you pay someone, you need their tax identification number — usually their Social Security number (SSN) if they are an individual, or their Employer Identification Number (EIN) if they are a business. You also need their legal name and mailing address.

Ask for this information on a W-9 form, which the person fills out and signs. The W-9 certifies that the number they give you is correct and that they are not subject to backup withholding. Keep the W-9 on file; you do not send it to the IRS, but you must have it if the IRS asks.

If someone refuses to provide a W-9 or gives you information you believe is false, you are required to withhold 24% of their payments and send that to the IRS as backup withholding. This is rare, but it is the law. Most people provide the W-9 without issue.

Timing: when to send the 1099 and file with the IRS

You send the 1099 to the recipient by January 31 of the year after you made the payment. For example, if you paid someone in December 2024, you send them the 1099 by January 31, 2025.

You file a copy with the IRS by the same date in most cases. However, some forms have later important date. A 1099-K, for instance, has a later filing important date that the IRS has extended multiple times in recent years. Check the specific form's instructions if you are unsure.

You send the 1099 to the person by mail or, in some cases, electronically if they have agreed to receive it that way. You file the copy with the IRS using tax software, a tax professional, or the IRS's online filing system. Many small business owners use accounting software that generates and files 1099s automatically.

What happens if you do not send a 1099 when you should

If you fail to send a 1099 to someone you should have, the IRS can penalize you. The penalty starts at $50 per form if you file it late but before the IRS contacts you. If you do not file it at all or file it after the IRS contacts you, the penalty can be higher — up to $280 per form as of 2024, though penalties adjust annually.

The person you paid may also face problems. If they do not receive a 1099 and do not report the income, the IRS may catch the discrepancy during an audit. The IRS has records of 1099s filed with them, and if a 1099 shows income paid to someone but that person did not report it, the IRS will investigate.

The best practice is to track all payments to non-employees throughout the year and issue 1099s by January 31. If you realize you missed one after the important date, you can still file it — it will be late, but filing late is better than not filing at all.

1099s for different types of payments

The type of 1099 you use depends on what you paid for. A 1099-NEC is for non-employee compensation — services like consulting, contracting, or freelance work. A 1099-MISC is for miscellaneous income including rent, royalties, prizes, and certain other payments. A 1099-INT is for interest you paid. A 1099-DIV is for dividends. A 1099-K is for payment card transactions and third-party network transactions like PayPal or Venmo.

If you are unsure which form to use, the instructions for each form on the IRS website explain what goes on it. Most small business owners use 1099-NEC for contractor payments and 1099-MISC for other payments. If you use accounting software, it usually guides you to the right form based on the type of payment.

Some payments do not require a 1099 at all. For example, you do not issue a 1099 for payments to a corporation for goods or services in the normal course of business. You also do not issue one for payments under the threshold, payments to employees, or payments to certain government agencies.

Frequently Asked Questions

Do I need a 1099 if I paid someone less than $600?

No. The threshold for most 1099s is $600 per person per year. If you paid someone $500 total in a year, you do not send a 1099. However, some forms have lower thresholds — 1099-INT and 1099-DIV are $10 — so check the specific form's rules if the payment is interest or dividends.

What if someone gives me a fake tax ID number on the W-9?

If you suspect fraud, you can report it to the IRS. In the meantime, you are required to withhold 24% of their payments as backup withholding and send that to the IRS. Keep the W-9 on file and document your concerns. If the person later provides a corrected number, you can stop withholding.

Can I send a 1099 electronically instead of by mail?

Yes, if the recipient has agreed to receive it electronically. You must get their consent in writing before sending it that way. Many people prefer email or online access to their 1099, so asking is worth it. The IRS copy must be filed electronically or by mail depending on how many forms you are filing.

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

You can issue a 1099 to a business if it is structured as a sole proprietorship, LLC, S-corp, or partnership. You do not issue a 1099 to a C-corporation for payments in the normal course of business. If you are unsure of the business structure, ask for their EIN and business type on the W-9.

What if I paid someone in cash — do I still need a 1099?

Yes. The method of payment does not matter. If you paid someone $600 or more in cash for services in a year, you still must send them a 1099-NEC. Cash payments are not exempt from 1099 reporting requirements.