For payments made in 2026, the reporting threshold for Form 1099-NEC and most Form 1099-MISC boxes is $2,000, up from $600. The change comes from the One Big Beautiful Bill Act and applies to tax years beginning after 2025. Forms for 2026 payments are due February 1, 2027, because January 31 falls on a Sunday.
Every January, the same scramble repeats inside accounting firms: pull the vendor list, chase W-9s, figure out who crossed the line, and file before the deadline. For the 2026 tax year, the line itself has moved. The $600 threshold that firms have used for decades is now $2,000 for most payments, and that changes which clients need forms, how many forms each one needs, and what a vendor cleanup has to focus on.
The higher threshold does not make the books matter less. It makes them matter more, because a contractor sitting at $1,800 in the vendor record and another $900 buried in an uncategorized Zelle line is now the difference between a form and no form.
What changed for the 2026 tax year
The IRS instructions for Forms 1099-MISC and 1099-NEC confirm that for tax years beginning after 2025, the minimum threshold for reporting certain payments increased to $2,000, and that the amount may be adjusted for inflation beginning in calendar year 2027. Here is how that plays out box by box.
| Payment type | Tax year 2025 (filed in 2026) | Tax year 2026 (filed in 2027) |
|---|---|---|
| Nonemployee compensation, including attorney fees (1099-NEC, box 1a) | $600 | $2,000 |
| Rents (1099-MISC, box 1) | $600 | $2,000 |
| Other income (1099-MISC, box 3) | $600 | $2,000 |
| Crop insurance proceeds (1099-MISC, box 9) | $600 | $2,000 |
| Royalties (1099-MISC, box 2) | $10 | $10 (unchanged) |
| Gross proceeds paid to an attorney (1099-MISC, box 10) | $600 | $600 (unchanged) |
| Direct sales of consumer products for resale (checkbox) | $5,000 | $5,000 (unchanged) |
Two details catch people out. First, attorney fees for services go in box 1a of the 1099-NEC and now use the $2,000 threshold, while gross proceeds paid to an attorney, such as a settlement payment, stay at $600 in box 10 of the 1099-MISC. Second, the threshold is set by the year the payment is made, so December 2025 payments still followed the $600 rule on the forms filed in early 2026.
What did not change
- Payments to corporations are still generally exempt, except payments for legal services and medical or health care payments, which remain reportable.
- Card and payment app payments made through a credit card or a third-party network are reported by the payment processor on Form 1099-K, not by your client on a 1099-NEC or 1099-MISC. The Form 1099-K threshold is back to more than $20,000 and more than 200 transactions.
- Backup withholding still applies when a payee does not provide a TIN, and the threshold for it moved to $2,000 along with the reporting threshold.
- Electronic filing is required once a payer files 10 or more information returns in total, counting all form types together.
- Form W-9 is still the cleanest way to get the vendor's legal name, entity type, and TIN before the first payment.
The 2027 filing calendar for 2026 payments
When a deadline falls on a weekend, it moves to the next business day. For the 2026 tax year, that pushes two of the dates.
| Form | Copy to recipient | Filed with the IRS |
|---|---|---|
| 1099-NEC | February 1, 2027 | February 1, 2027 (paper or electronic) |
| 1099-MISC | February 1, 2027 | March 1, 2027 on paper, March 31, 2027 electronically |
Late filing gets expensive quickly. For returns due in 2026, the IRS penalty is $60 per form when filed up to 30 days late, $130 when filed after that but by August 1, and $340 after August 1 or when never filed, with $680 per form for intentional disregard. The IRS adjusts these amounts each year, so check the current figures before quoting them to a client.
Where the books create the 1099 problem
A 1099 is only as accurate as the vendor data behind it. In files that come to a firm in January, the same issues show up again and again:
- Payments booked to a bank description, not a vendor. A Zelle or ACH payment saved as "ZELLE TO J RIVERA" or left in Uncategorized Expense never reaches the vendor total, so the contractor looks smaller than they are.
- Duplicate vendor records. "Rivera Landscaping" and "Rivera Landscaping LLC" each sit under $2,000 while the combined total does not.
- Card payments mixed into contractor totals. Payments made by credit card or through a payment app belong on the processor's 1099-K. Leaving them in inflates the 1099-NEC.
- Merchandise purchases coded like services. Buying supplies from a vendor is not nonemployee compensation, even if the same vendor also performs services.
- Payments to the owner's own entities recorded as expenses when they are really draws, distributions, or intercompany transfers.
- Missing entity types. Without a W-9, nobody knows whether the vendor is a corporation, a single-member LLC, or an individual, so nobody knows whether a form is needed.
A year-end vendor cleanup that actually holds up
Run this in November or early December, not the last week of January. The goal is a reportable-payments list your tax team can trust without reopening the books.
- Pull every payee paid more than about $1,500 so far in 2026. The cushion covers December payments that will push vendors over $2,000. In QuickBooks Online, the Transaction List by Vendor report filtered to the current year is a good starting point.
- Clear the holding accounts first. Reclass Uncategorized Expense, Ask My Accountant, and suspense lines to real payees. This is where the hidden contractor payments usually are.
- Merge duplicate vendors so each payee has one record and one total.
- Separate payments by method. Exclude card and payment app payments from 1099 totals, since the processor reports them.
- Confirm entity type and TIN. Request missing W-9s now, while vendors are still responsive. Flag corporations, but keep attorneys and medical providers on the list.
- Map accounts to boxes. Contract labor and professional fees go to 1099-NEC box 1a, rent to 1099-MISC box 1, and settlement payments to attorneys to 1099-MISC box 10.
- Check the software threshold. Make sure the 1099 workflow in QuickBooks Online or your filing platform applies $2,000 for 2026 payments, and spot-check a few vendors by hand.
- Hand the tax team a final list with payee, TIN status, box, amount, and anything still open, so filing is a data-entry step and not an investigation.
A worked example
A landscaping client paid 14 outside vendors in 2026. Under the old $600 rule, the vendor report suggested 11 forms. Under the $2,000 rule, the report shows 4. A short cleanup changes the answer again.
| Payee | In vendor record | Found in cleanup | Excluded | Reportable | Form? |
|---|---|---|---|---|---|
| Rivera Landscaping LLC (single-member) | $1,450 | $900 Zelle in Uncategorized | None | $2,350 | Yes, 1099-NEC |
| Apex Cleaning Inc. (C corporation) | $6,200 | None | Corporation | $0 | No |
| M. Chen, designer | $2,200 | None | $400 paid by card | $1,800 | No |
| Office landlord (individual) | $24,000 | None | None | $24,000 | Yes, 1099-MISC box 1 |
| Law Office of D. Park PLLC | $1,500 fees | $3,000 settlement paid to the attorney | None | $1,500 fees, $3,000 gross proceeds | Yes, 1099-MISC box 10 only |
Without the cleanup, Rivera would have been missed and M. Chen would have received a form they should not get. The law office shows why the attorney rules need their own check: the fees fall under $2,000, but the settlement payment still crosses the $600 threshold for gross proceeds.
What to tell clients this year
Clients will hear "the 1099 threshold went up" and conclude they can stop collecting W-9s. That is the wrong takeaway. A short message works better: the reporting threshold is now $2,000 for most payments, W-9s are still needed before the first payment, card payments are handled by the processor, and the firm will confirm the final list in January. The threshold can also rise with inflation from 2027, so a fixed "only over $2,000" habit will not hold for long.
When to hand the cleanup off
If the 1099 question is really a books question, with months of unreviewed bank feed, contractor payments in holding accounts, and no reconciliations since summer, the vendor list cannot be trusted until the file is brought current. That is a catch-up or a cleanup, not a 1099 task, and it is exactly the kind of work that piles up on a firm's team in January.
BooksCaughtUp handles catch-up bookkeeping and year-end tax-ready books for CPA firms, including a reconciled vendor list mapped to 1099 boxes, delivered under your firm's name. Your first file is free in exchange for honest feedback.
Sources: IRS Instructions for Forms 1099-MISC and 1099-NEC (tax year 2026); IRS Form 1099-K threshold FAQs; IRS Information return penalties. Confirm current rules with the IRS before filing.