Who You Need To Send a 1099 Form To

You send a 1099 to anyone you paid more than $600 in a calendar year for work that is not a W-2 job

The threshold is $600 per person per year. If you paid one contractor $400 and another $300, you send nothing. If you paid one person $601, you send them a 1099. The $600 rule applies to most common 1099 situations — but some categories have different thresholds, and some payments don't require a 1099 at all, even if they exceed $600.

You send the form to the person or business that did the work. You also send a copy to the IRS. The person receiving it needs it to report their income on their tax return. The IRS uses it to match what they reported against what you reported.

The important date to send 1099s to the people who earned the money is January 31 of the year after payment. The important date to send the IRS copy is February 28 if you file on paper, or March 31 if you file electronically.

Key Takeaways

• Send a 1099-NEC to anyone you paid $600 or more for non-employee services in a single calendar year.
• You send one copy to the worker and another copy to the IRS; the worker needs it to file their tax return.
• Payments to corporations, payments for goods (not services), and payments to your spouse for household work do not require a 1099.
• The important date to send 1099s to workers is January 31; the important date to send the IRS copy is February 28 (paper) or March 31 (electronic).
• Different 1099 types have different thresholds — for example, 1099-MISC for rent is $600, but 1099-INT for interest is $10.

When the $600 threshold does not explore

Some payments require a 1099 even if they are under $600, and some payments over $600 do not require one. The threshold depends on the type of payment and the form you would use.

Interest and dividends have a $10 threshold on a 1099-INT or 1099-DIV. If you paid someone $15 in interest, you send a 1099-INT. Rental income on a 1099-MISC requires $600 or more. Payments to a corporation — even if they exceed $600 — do not require a 1099-NEC. A corporation files differently than an individual, and the IRS does not require you to report payments to them on a 1099.

Payments for goods (physical items you bought for resale or use) do not require a 1099, even if you paid $5,000 to a vendor. A 1099 is for services and income, not for purchases. Payments to your spouse for household work do not require a 1099, even if they exceed $600 — the IRS treats household income differently.

Payments that look like they should get a 1099 but do not

Some common payments are exempt even though they involve money changing hands. Reimbursements for expenses do not require a 1099. If you paid a contractor $800 total but $300 was reimbursement for materials they bought on your behalf, only the $500 service portion counts toward the $600 threshold. You need documentation showing what was reimbursement and what was payment for work.

Payments to employees never get a 1099, even if they are under $5,000 a year. Employees get a W-2. If someone is on your payroll, they are not a 1099 recipient. Payments to a sole proprietor who is operating as a business (not just a person doing side work) may still require a 1099 if the threshold is met — the form of business does not change the rule, but the person's status as an employee or contractor does.

Payments for personal services — like paying a babysitter, house cleaner, or lawn care person — do require a 1099 if you pay them $600 or more in a year. These are sometimes called household employees, but if you pay them as a contractor (not on payroll), a 1099 is required at the $600 threshold.

How to report the same person across multiple payments

If you paid one contractor $200 in January, $250 in March, and $180 in September, you add them up: $630 total. You send one 1099 for $630, not three separate forms. The threshold is the total across the entire calendar year, not per transaction.

You need the contractor's name, address, and tax ID (usually their Social Security number or EIN). If you do not have their tax ID, you should request it before year-end. The IRS requires it on the form. If you cannot get it, there are procedures for reporting without it, but it is better to have it.

What information goes on the 1099 you send

A 1099-NEC (the most common form for contractor payments) has boxes for your information, the contractor's information, and the amount paid. Box 1 is "Nonemployee compensation" — this is where the total goes. You fill in the year, your name and address, their name and address, and the amount.

You do not need to itemize every single payment. You report the total for the year. If you paid someone $50 a week for 52 weeks, you report $2,600 in Box 1, not 52 separate line items.

You send Copy B to the contractor and Copy A to the IRS. Some states also require a state copy. The contractor uses Copy B to file their tax return. The IRS uses Copy A to verify income reporting.

Penalties for not sending a 1099 when you should

If you fail to send a required 1099, the IRS can assess a penalty. The amount depends on how late the form is and whether the failure was intentional. For forms filed late but before August 1, the penalty is usually $50 per form. For forms filed after August 1, it rises to $100 per form. Intentional disregard can result in higher penalties.

The contractor may also file their tax return without the 1099 and report the income themselves. If they do, and their report matches yours, there is no problem. But if there is a mismatch — they report less than you paid them, or you report more than they report — the IRS will notice and may audit both of you.

Frequently Asked Questions

Do I need a 1099 if I paid someone with cash?

Yes. The method of payment does not matter. If you paid $600 or more in cash for services, you still send a 1099. Cash payments are actually more important to document because there is no bank record. Keep receipts or a log of what you paid and when.

What if the person I paid does not have a Social Security number or EIN?

You still send the 1099 with their name and address. The IRS has a procedure for reporting without a tax ID, though it is not ideal. You should ask for their tax ID before paying them. If they refuse or do not have one, document your request and proceed with the form.

Do I send a 1099 to a business owner or just to individuals?

It depends on the business structure. Payments to a corporation do not require a 1099. Payments to a sole proprietor, partnership, or LLC (unless it is taxed as a corporation) do require a 1099 if the threshold is met. Ask the person what their business structure is if you are unsure.

Can I send a 1099 electronically or does it have to be paper?

You can send it either way. Paper is traditional, but electronic delivery is acceptable if the recipient agrees. You must file Copy A with the IRS electronically if you are sending more than a certain number of forms — currently 250 or more — so most businesses file electronically.

What if someone I paid says they do not want a 1099?

You send it anyway. The 1099 is a reporting requirement to the IRS, not optional. The person cannot refuse it. They may not like it because it documents their income, but that does not change your obligation to report it.