When You Need to File a 1099 Form With the IRS

Who has to file a 1099 with the IRS

You need to file a 1099 form if you paid someone $600 or more during the year for services, and that person is not your employee. The most common situation is paying an independent contractor — a plumber, freelance writer, consultant, or repair person — for work they did for your business or rental property.

The $600 threshold is the federal standard, though some states set different amounts. You file the 1099 to report what you paid so the IRS can match it against what the contractor reports on their own tax return. If you paid multiple contractors, you file a separate 1099 for each one.

The rule applies whether you paid in cash, check, credit card, or any other method. It also applies whether the contractor asked you to file one or not — your obligation to file does not depend on their request.

Key Takeaways

You file a 1099 when you pay a non-employee $600 or more in a calendar year for services or work performed.
The threshold is $600 federally, though some states require filing at lower amounts — check your state's rules.
You file one 1099 per contractor and send a copy to the IRS and a copy to the contractor by January 31.
Payments to employees, corporations, and certain other entities do not require a 1099 — only payments to individuals and sole proprietorships.
If you do not file when required, the IRS can assess penalties, though they may be waived if you file late but within a reasonable time.

Who does not need a 1099

You do not file a 1099 for payments to your employees, even if they earned more than $600. Employees are reported on W-2 forms instead, which your payroll system handles. You also do not file a 1099 for payments to a corporation — only for individuals and sole proprietorships.

Payments to certain other entities are also exempt. If you paid a law firm, accounting firm, or other business entity that is set up as a partnership or LLC taxed as a corporation, you typically do not file a 1099. The rule is that you file a 1099 only for payments to individuals and sole proprietors — people running a business under their own name with no separate business entity.

You also do not file a 1099 for payments under $600 in a calendar year, even if you made multiple payments to the same person. If you paid a contractor $300 in March and $250 in September, you do not file a 1099 because the total is under $600.

What form to use and when to send it

The most common form is the 1099-NEC (Nonemployee Compensation), used for payments to contractors for services. You may also use 1099-MISC for certain other payments like rent paid to an individual landlord or prizes and awards. For payments made through a payment processor like PayPal or Square, the processor may file a 1099-K on your behalf, though you still need to track and report the payment yourself.

You must send a copy of the 1099 to the contractor by January 31 of the following year. You file a copy with the IRS by the same date, though if January 31 falls on a weekend or holiday, the important date moves to the next business day. If you file electronically, the important date may be slightly later — check the current year's IRS instructions.

You can file the 1099 on paper by mail or electronically through the IRS FIRE system (Filing Information Returns Electronically) or through tax software. Many tax preparation services and accounting firms handle 1099 filing for their clients.

What information goes on the form

You will need the contractor's full name, address, and Taxpayer Identification Number (TIN) — usually their Social Security number if they are self-employed. You also need your own name, address, and TIN as the payer. The form asks for the total amount you paid them during the year and the type of service or work performed.

If you do not have the contractor's TIN, you should ask for it before you pay them. If they refuse to provide it or provide an incorrect number, you can still file the 1099 with the information you have, but you may be required to withhold taxes from future payments — a process called backup withholding. It is simpler to collect the correct TIN upfront using IRS Form W-9.

What happens if you do not file

If you do not file a 1099 when you are required to, the IRS can assess a penalty. The penalty amount varies depending on how late you file and whether the failure was intentional. As of recent years, the penalty ranges from $50 to $280 per form, though the IRS may waive or reduce it if you file the form within a reasonable time after the important date or if you have a good reason for the delay.

Beyond the penalty, failing to file creates a mismatch: the contractor reports their income to the IRS, but the IRS has no record of what you paid them. This can trigger an audit of either your return or theirs. Filing the 1099 protects both you and the contractor by creating a clear record.

State filing requirements

Many states require you to file a 1099 with the state tax authority as well as the IRS. Some states use the federal $600 threshold, while others set a lower amount — typically $500 or $250. A few states do not require 1099 filing at all. You should check your state's Department of Revenue or tax authority website to learn the threshold and important date for your state.

If your state requires filing, you usually file a copy of the federal 1099 or a state-specific version. The state important date is often the same as the federal important date (January 31) but may be different. Some states allow electronic filing, while others require paper forms.

Frequently Asked Questions

Do I need a 1099 if I paid someone with a credit card or payment app?

If you paid through a payment processor like PayPal, Stripe, or Square, the processor may file a 1099-K on your behalf and send a copy to the IRS. You still need to track the payment and report it on your own tax return. If the processor files a 1099-K, you do not also file a 1099-NEC for the same payment — that would be duplicate reporting.

What if the contractor tells me not to file a 1099?

You file a 1099 based on what you paid, not on what the contractor requests. If you paid $600 or more, you are required to file. The contractor may ask you not to file because they want to underreport income, but that does not change your legal obligation. Filing protects you by creating a clear record of the payment.

Can I file a 1099 for someone who is not a U.S. citizen?

Yes, you can file a 1099 for a non-citizen if they are a resident alien or have a valid Taxpayer Identification Number. You will need their TIN, which may be an Individual Taxpayer Identification Number (ITIN) if they do not have a Social Security number. Ask them to complete Form W-9 to provide this information.

What if I paid a contractor but lost their information?

You should still file the 1099 with whatever information you have — their name and the amount you paid. If you do not have their TIN, you can file with that field blank or with an incorrect number, but this may trigger backup withholding on future payments. Contact the contractor and ask them to provide their correct TIN so you can file an amended 1099 if needed.

Do I need to file a 1099 for payments to my spouse or family members?

If your spouse or family member is a contractor and you paid them $600 or more for legitimate work, yes, you file a 1099 just as you would for any other contractor. The family relationship does not exempt you from the filing requirement. However, if they are your employee, you file a W-2 instead.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.