How to Issue a 1099 Form to a Contractor or Freelancer

The basic steps to send a 1099-NEC or 1099-MISC

To issue a 1099 form, you collect the contractor's name, address, and tax ID number (usually their Social Security Number or Employer Identification Number), report the amount you paid them during the year, and send them a copy by January 31st. You also send a copy to the IRS with Form 1096, which is a cover sheet that bundles all your 1099s together. The form you use depends on what you paid for: Form 1099-NEC is for non-employee compensation (freelance work, consulting, contract labor), and Form 1099-MISC is for other payments like rent or royalties.

You do not need to issue a 1099 to every person you pay. The threshold is $600 in a calendar year for most types of work. If you paid a contractor $400 total, you do not file a 1099 for them. If you paid them $600 or more, you do. The $600 rule applies to 1099-NEC; some other 1099 forms have different thresholds or no threshold at all.

The IRS expects you to have the contractor's correct tax ID before you pay them. You collect this on Form W-9, which the contractor fills out and signs. Keep the W-9 on file for at least four years. If a contractor does not provide a W-9 and you still pay them, you may be required to withhold 24% of their payment and send it to the IRS as backup withholding.

Key Takeaways

You must issue a 1099-NEC to any contractor you paid $600 or more in a calendar year for non-employee work.
Collect the contractor's name, address, and tax ID on Form W-9 before you pay them, and keep the W-9 for your records.
Send Copy B of the 1099 to the contractor by January 31st and file Copy A with the IRS along with Form 1096 by the same date.
If a contractor does not provide a W-9, you must withhold 24% of their payment and report it as backup withholding.
You can file 1099s on paper or electronically through the IRS FIRE system, and many tax software providers offer 1099 filing tools.

Collecting the contractor's information on Form W-9

Before you pay a contractor, send them Form W-9 (Request for Taxpayer Identification Number and Certification). The contractor fills in their legal name, address, tax ID number, and business name if they have one, then signs and dates it. You do not send the W-9 to the IRS; it stays in your files as proof that you asked for the information and that the contractor certified it was correct.

If a contractor refuses to give you a W-9 or gives you incorrect information, you are required to withhold 24% of each payment you make to them and send that withheld amount to the IRS. This is called backup withholding. You continue withholding until the contractor provides a valid W-9 or the IRS tells you to stop. At the end of the year, you report the withheld amounts on Form 1099-NEC in the backup withholding box.

Keep the signed W-9 for at least four years. If the IRS audits you and asks whether you had a W-9 on file, you need to produce it. A W-9 is not a contract; it is only a tax form. You can have a separate contract with the contractor that covers the scope of work, payment terms, and other business details.

Deciding between 1099-NEC and 1099-MISC

Form 1099-NEC (Nonemployee Compensation) is the form you use most often. It reports payments for services: freelance writing, consulting, contract programming, design work, repairs, or any other work performed by someone who is not your employee. If you paid a contractor for their labor or informed, use 1099-NEC.

Form 1099-MISC (Miscellaneous Income) covers other types of payments. You use it to report rent paid to a landlord, royalties paid to an author or musician, prizes or awards, or payments to a medical or health care professional. The most common use is rent: if you paid a landlord $600 or more in rent during the year, you report it on 1099-MISC, not 1099-NEC.

Some payments do not require a 1099 at all. Payments to corporations (other than medical corporations) do not require a 1099-NEC. Payments for goods (materials, supplies, inventory) do not require a 1099. Payments to a sole proprietor for goods also do not require a 1099. If you are unsure which form to use, check the IRS instructions for Form 1099-NEC and Form 1099-MISC, which list the types of income that belong on each form.

Filling out the 1099 form correctly

The 1099 has boxes for your information (as the payer), the contractor's information (as the recipient), and the dollar amounts. Box 1 on 1099-NEC is where you enter the total non-employee compensation you paid. If you withheld backup withholding, that goes in Box 4. Other boxes are for specific types of income or withholding; most small businesses only use Box 1.

Use the contractor's legal name as it appears on their tax return, not a business name or nickname. If the contractor is a sole proprietor, use their personal name. If they are a business entity (LLC, S-corp, C-corp), use the business name. The address should be the mailing address the contractor gave you on the W-9. If the address changes during the year, use the address from the W-9.

The dollar amount in Box 1 should be the total you paid the contractor during the calendar year, before any deductions or withholding. Do not subtract taxes, do not subtract expenses the contractor incurred, and do not subtract anything else. Report the gross amount paid. If you withheld backup withholding, that amount is already included in the gross, and you also report it separately in Box 4.

Sending the 1099 to the contractor and the IRS

You must send Copy B of the 1099 to the contractor by January 31st of the year following the payment year. For example, for payments made in 2024, you send the 1099 by January 31, 2025. You can send it by mail or, if the contractor has agreed, by email or through an online portal. Keep a record of when you sent it.

You file Copy A with the IRS. You also prepare Form 1096, which is a cover sheet that lists all the 1099s you are filing together. The 1096 goes on top of the stack of 1099s. You mail both to the IRS address listed in the Form 1096 instructions, or you file electronically through the IRS FIRE system (Filing Information Returns Electronically). The important date to file with the IRS is also January 31st, though if you file electronically, the important date may be slightly later.

Keep Copy C for your records. Some tax software and payroll providers print all three copies at once. If you are filing on paper, make sure you use the official IRS forms or forms that match the IRS specifications exactly; forms that do not meet the specifications may be rejected by the IRS.

Filing 1099s electronically or on paper

You can file 1099s on paper by mailing them to the IRS, but most businesses now file electronically. The IRS FIRE system is free and accepts 1099-NEC, 1099-MISC, and other information returns. You create an account, enter your business information, upload or enter the 1099 data, and submit. The IRS confirms receipt and processes the forms.

Many tax software providers (including TurboTax, H&R Block, and others) offer 1099 filing tools that connect to FIRE or file on your behalf. Some payroll services like Guidepoint, Stripe, or QuickBooks also have built-in 1099 filing. These tools often cost $15 to $50 per return or a flat fee if you have many contractors. If you have only one or two contractors, filing on paper or using FIRE directly may be cheaper.

If you file late or file with incorrect information, the IRS may assess penalties. The penalty for filing late is usually $50 per form, but it can be higher if the error is intentional or if you have a history of late filing. Penalties for incorrect information are lower if you correct it within 30 days of the important date. If you discover an error after you have filed, you can file a corrected 1099 (marked as a correction) and send it to both the contractor and the IRS.

Common mistakes to avoid

Using the wrong form is common. Remember: 1099-NEC is for services (work), and 1099-MISC is for rent, royalties, and other non-service payments. If you pay a contractor for labor, use 1099-NEC. If you pay a landlord for rent, use 1099-MISC.

Reporting the wrong amount is another frequent error. The amount on the 1099 should match what you actually paid the contractor during the year. If you have invoices, receipts, or bank records showing the payments, add them up and enter that total. Do not estimate or round. If the contractor disputes the amount, ask them for their records and reconcile before you file.

Issuing a 1099 to a corporation (other than a medical corporation) is a mistake. Corporations do not receive 1099-NEC forms. If you paid a corporation for services, you do not file a 1099. If you are unsure whether the contractor is a corporation, ask them or check their W-9; they will have indicated their business structure.

Filing late or not filing at all can result in penalties and may trigger an IRS notice. Set a calendar reminder for January 15th to start gathering your 1099 data, so you have time to prepare and file by January 31st. If you know you will miss the important date, file what you can and file the rest as soon as possible; late is better than never.

Frequently Asked Questions

Do I have to issue a 1099 if I paid someone less than $600?

No. The threshold for 1099-NEC is $600 in a calendar year. If you paid a contractor $500 total, you do not file a 1099 for them. However, you still need to keep records of the payment for your own tax return. Some other 1099 forms (like 1099-MISC for rent) have different thresholds, so check the specific form instructions.

What if the contractor never gave me a W-9?

You are required to withhold 24% of each payment and send it to the IRS as backup withholding. At the end of the year, you report the withheld amount on the 1099-NEC in Box 4. Ask the contractor again for a W-9; if they provide one, you can stop withholding. If they never provide one, keep withholding and report it on the 1099.

Can I file 1099s after January 31st?

You can, but you will likely face penalties. The IRS charges $50 per form for filing late, though the penalty is lower if you file within 30 days of the important date. If you discover an error after filing, you can file a corrected 1099 marked as a correction. File as soon as you can if you miss the important date.

Do I send a 1099 to an employee?

No. Employees receive a W-2 form, not a 1099. A 1099 is only for contractors and other non-employees. If someone is on your payroll and you are withholding taxes and paying payroll taxes, they are an employee and you issue a W-2, not a 1099.

What if I paid a contractor in cash?

You still file a 1099 if the total is $600 or more. The form does not distinguish between cash and other payment methods. Report the total amount you paid, regardless of how you paid it. Keep your own records (receipts, invoices, bank records) to support the amount you report.

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.