Who has to file a 1099

You must file a 1099 if you paid someone who is not your employee at least $600 in a single calendar year for services or other work. The person you paid could be a contractor, freelancer, vendor, or professional — anyone who is self-employed or runs their own business. The $600 threshold is the most common one, though some types of payments (like attorney fees or medical payments) have different thresholds.

The rule applies whether you paid in cash, check, credit card, or bank transfer. If you own a business or are self-employed yourself, you are responsible for tracking these payments and filing the forms. If you are an individual who hired someone for personal reasons — like paying a neighbor to paint your house — you generally do not have to file, because the $600 rule applies mainly to business payments.

The IRS uses these forms to match what you reported paying against what the person you paid reported as income. If the numbers do not match, the IRS may contact one or both of you.

Key Takeaways

  • You must file Form 1099-NEC or 1099-MISC if you paid a non-employee at least $600 in a calendar year for services or work.
  • The $600 threshold applies to most business payments, but some categories like attorney fees or medical payments have different thresholds.
  • You file the 1099 with the IRS and send a copy to the person you paid by January 31 of the following year.
  • If you paid someone less than $600, or if you paid an employee (who receives a W-2 instead), you do not file a 1099 for that payment.
  • Payments for personal services like hiring a neighbor to paint your house typically do not require a 1099.

The $600 threshold and what counts toward it

The $600 rule means you add up all payments to the same person during the calendar year (January 1 through December 31). If the total reaches $600 or more, you file. If it stays below $600, you do not. This applies to each person separately — if you paid one contractor $400 and another $300, you file for neither. If you paid one contractor $400 in January and $250 in November, you file because the total is $650.

Payments that count toward the $600 include fees, commissions, rent (in some cases), prizes, and awards. Payments that do not count include wages you paid to an employee (those go on a W-2 instead), payments to corporations (unless the payment is for legal or medical services), and payments for goods rather than services. If you are unsure whether a payment counts, the safest approach is to ask the person you paid what form they expect, or to consult a tax professional.

Which form to file: 1099-NEC versus 1099-MISC

The most common form is Form 1099-NEC (Nonemployee Compensation). You file this when you paid someone for services — a consultant, freelancer, contractor, or other self-employed person. This is the form most people think of when they hear "1099."

Form 1099-MISC (Miscellaneous Income) covers other types of payments: rent paid to an individual landlord, royalties, prizes, awards, and some medical and legal payments. You may need to file both forms if you made different types of payments to the same person, though this is uncommon.

Your accountant or tax software can tell you which form applies to your situation. If you are not sure, the person you paid may also know — many self-employed people track what form they expect to receive.

When you do not have to file a 1099

You do not file a 1099 if the total you paid to one person stays below $600 in the calendar year. You also do not file if you paid an employee — employees receive a W-2 form instead, and you cannot file a 1099 for wages.

You do not file a 1099 for payments to a corporation (with narrow exceptions for legal and medical services paid to a corporation). You do not file for payments for goods — only for services or other income. If you paid a store or supplier for inventory or materials, that is not a 1099 situation.

Payments for personal services — like paying a neighbor to mow your lawn or a friend to help you move — do not require a 1099 because they are personal, not business, payments. The $600 rule applies to business-related payments.

important date and where to send the forms

You must send a copy of the 1099 to the person you paid by January 31 of the year after payment. You must file the form with the IRS by the same date (though if January 31 falls on a weekend, the important date moves to the next business day). You file with the IRS using Form 1096 (a cover sheet) along with your 1099 forms, or you can file electronically through the IRS e-file system.

Keep a copy for your own records. If you use tax software or work with an accountant, they can often file these forms for you or help you prepare them. Many accounting software programs have built-in 1099 filing tools.

What happens if you do not file when you should

If you fail to file a 1099 when you were required to, the IRS may assess a penalty. The penalty amount depends on how late you file: if you file within 30 days of the important date, the penalty is smaller than if you file much later. If you file more than 60 days late, the penalty is higher.

Beyond the penalty, not filing can create problems for the person you paid. They may face questions from the IRS if their reported income does not match what you reported paying them. If you realize you missed a important date, you can still file the form — it is better to file late than not to file at all.

Frequently Asked Questions

Do I have to file a 1099 if I paid someone in cash?

Yes, if the total was $600 or more in the calendar year. The payment method does not matter — cash, check, credit card, or bank transfer all count the same way. You still need to track the payments and file the form.

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

You still have to file if you met the $600 threshold. The person's preference does not change your legal obligation. However, you should send them a copy so they are not surprised when they receive it from the IRS.

Do I file a 1099 for payments to my business partner or LLC?

No. Payments between partners or to an LLC you own are not 1099 situations. You handle those through your business tax return instead. If you paid an outside contractor or vendor, that is a 1099.

Can I file a 1099 for someone I paid less than $600?

You can, but you are not required to. Some people file 1099s for all payments to contractors regardless of amount, for record-keeping purposes. Check with your accountant about whether this makes sense for your situation.

What if I paid someone but do not have their tax ID number?

You need their Social Security number or Employer Identification Number (EIN) to file the form. If you do not have it, ask them for it before the January 31 important date. If they refuse to provide it, you may still be required to file with the information you have and note that the number was not provided.