Who has to file a 1099 with the IRS

You have to file a 1099 form if you paid someone who is not your employee at least $600 in a single calendar year for services or goods. The person you paid could be a contractor, freelancer, vendor, or consultant — 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 key distinction is that you are reporting money you paid out, not money you received. If you are the person who was paid, you do not file the 1099 — the person or business that paid you does. You will receive a copy of it in the mail, usually by January 31st of the following year.

If you are self-employed and earned less than $600 from a single payer, you still may owe taxes on that income, but that payer does not have a legal obligation to send you a 1099. You would report the income on your own tax return.

Key Takeaways

  • You must file a 1099 if you paid a non-employee at least $600 in a calendar year for services or goods.
  • The person or business that paid you files the 1099 — you do not file it yourself if you received the payment.
  • Different types of 1099 forms exist for different kinds of payments, and some have thresholds lower or higher than $600.
  • You receive a copy of any 1099 filed about you, and the IRS receives a copy at the same time.
  • If you earned less than $600 from one payer, they do not have to file a 1099, but you still owe taxes on that income.

The $600 threshold and what it covers

The $600 rule applies to most common 1099 situations: paying a plumber, hiring a graphic designer, contracting with a consultant, or buying goods from a vendor who is not a registered retailer. It is the total amount paid to that one person or business in the calendar year (January through December), not per transaction. If you paid someone $300 in March and $400 in November, you owe a 1099.

Some payment types have different thresholds. Payments to attorneys, for example, must be reported if they total $600 or more. Payments for medical and health care services must be reported if they total $600 or more. Payments made through payment settlement entities like PayPal or Square may have lower thresholds — currently $5,000 in some cases, though this has changed in recent years and may change again. If you use one of these platforms, the platform itself may file the 1099 on your behalf.

Payments to corporations generally do not require a 1099, because corporations file their own tax returns. Payments to your spouse or to a business owned by your spouse also do not require a 1099. Reimbursements for expenses do not count toward the threshold.

Which 1099 form to use

The most common form is the 1099-NEC (Nonemployee Compensation), used for payments to contractors, freelancers, and self-employed service providers. This replaced the older 1099-MISC for most nonemployee compensation starting in 2020.

The 1099-MISC is still used for certain payments: rent, royalties, prizes, awards, and other miscellaneous income that does not fit the 1099-NEC category.

The 1099-INT reports interest paid to someone. The 1099-DIV reports dividends. The 1099-K is filed by payment processors (like PayPal, Square, or Stripe) when they process payments on your behalf. If you receive payments through one of these platforms, you may receive a 1099-K instead of a 1099-NEC, depending on the volume and type of payment.

If you are unsure which form applies, the IRS website lists each form and its purpose. Your accountant or tax software can also guide you to the right one.

How and when to file a 1099

You file a 1099 with the IRS by submitting it electronically through the IRS Filing Information Returns Electronically (FIRE) system, or by mailing paper forms. Most businesses now file electronically. You must also send a copy to the person or business you paid — they should receive it by January 31st of the year following the payment.

The important date to file 1099 forms with the IRS is February 28th if you file on paper, or March 31st if you file electronically. If the important date falls on a weekend or holiday, it moves to the next business day. Missing the important date can result in penalties, which increase if the IRS determines the failure was intentional.

If you file your business taxes through an accountant or use tax software, you can often enter the payment information and let the software generate and file the forms for you. Some accounting platforms integrate directly with the IRS system.

What happens if you do not file a required 1099

If you owe a 1099 and do not file it, the IRS can assess a penalty. The penalty amount depends on how late the form is and whether the failure appears intentional. As of recent years, the penalty ranges from $50 to $280 per form, depending on how long after the important date you file. If you never file, the penalty can be higher.

Beyond the penalty, not filing a 1099 can create a mismatch between what you report on your own tax return and what the IRS sees. The person you paid will report the income on their return, and if the IRS does not see a matching 1099 from you, it may flag the discrepancy and audit either or both of you.

If you realize you missed the important date, file the form as soon as you can. The IRS is generally more lenient with late filings than with no filing at all, especially if you can show the failure was unintentional.

1099s for payments you received

If you were paid $600 or more by a single payer for services or goods, you should expect to receive a 1099 from them. You will get a copy in the mail by January 31st. The IRS also receives a copy, so the income is already reported to them.

When you file your own tax return, you must report the income shown on the 1099. If the amount on the 1099 is wrong, contact the payer and ask them to file a corrected form (a 1099-X). Do not ignore the discrepancy — the IRS will match the 1099 to your return, and if the amounts do not line up, you may face questions or penalties.

If you did not receive a 1099 by early February but believe you should have, contact the payer and ask them to send it or confirm whether they filed one. If they confirm they filed it but you never received it, you can contact the IRS to request a copy.

Frequently Asked Questions

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

Yes. The IRS requires a 1099 for payments of $600 or more regardless of how you paid — cash, check, bank transfer, or credit card. The method of payment does not change the filing requirement. Keep records of the payment and the person's name and address so you can complete the form accurately.

What if the person I paid does not give me their Social Security number or tax ID?

You still have to file the 1099, but you must make a reasonable effort to get their number first. Ask them directly and document that you asked. If they refuse to provide it, you can file the 1099 with the information you have and note that the number was not provided. The IRS may follow up with them separately.

Do I file a 1099 for payments to a business with a business license?

It depends on the business structure. Payments to sole proprietors and partnerships require a 1099 if they meet the threshold. Payments to corporations generally do not. If you are unsure whether the business is incorporated, ask them or check your state's business registry.

Can I file a 1099 late, or do I have to wait until next year?

You can file a 1099 late at any time, though penalties explore if you miss the important date. You do not have to wait until the next calendar year. If you realize in March that you owe a 1099 for last year's payments, file it when ready rather than waiting.

What if I paid someone less than $600 — do I still need to keep records?

You do not have to file a 1099 for payments under $600, but you should keep records of all business payments for your own accounting and tax purposes. If you are audited, the IRS may ask to see documentation of all payments you made, regardless of whether a 1099 was filed.