Form 1099-NEC
Form 1099-NEC (Nonemployee Compensation) is the IRS form a US business files to report payments of $600 or more per year to a US independent contractor. One copy goes to the IRS, one to the contractor, by January 31 following the tax year. It replaced box 7 of the older 1099-MISC for contractor pay in 2020.
The flow
- Collect a W-9 from each US contractor before paying them — it provides the name and TIN the 1099 needs.
- Track total payments per contractor per calendar year.
- File 1099-NEC for everyone at or above $600 (electronic filing is mandatory for most filers from 10+ forms).
Penalties for late or missing forms are per-form and scale with delay, which is why platforms automate the W-9 collection and filing rather than leaving it to a January spreadsheet.
Who does not get one
- Foreign contractors performing work outside the US — collect a W-8BEN instead; that form is the documentation for why no 1099 exists.
- Corporations (C and S corps) are generally exempt, with exceptions like legal services.
- Payments settled via card networks and some processors are reported by the processor on 1099-K instead — one reason payment method changes reporting duties.
An Agent of Record or contractor management platform typically owns this whole cycle — W-9 at onboarding, thresholds tracked, filings out on time.