You need to send a Form 1099-NEC to a contractor once you've paid them $2,000 or more for services during the calendar year, provided the payment was made in the course of your trade or business. That threshold applies for tax year 2026 onward: the One Big Beautiful Bill Act (OBBBA) raised it from the $600 figure that had stood since 1954. Furnish the contractor's copy and file with the IRS by January 31, or the next business day if that date falls on a weekend or holiday.

What's the dollar threshold for sending a contractor a 1099?

$2,000, aggregated across everything you paid that contractor for services during the year. This is the box 1a Nonemployee Compensation threshold on Form 1099-NEC, and it applies to payments for services performed by someone who isn't your employee, made in the course of your trade or business, to an individual, partnership, or (in the specific case below) a corporation. The IRS instructions state it directly: file Form 1099-NEC for each person you paid at least $2,000 for services during the year.

When exactly is the deadline?

January 31, for both copies: the one you furnish to the contractor and the one you file with the IRS. If January 31 lands on a Saturday, Sunday, or legal holiday, the deadline rolls to the next business day. For 2025 payments reported in the 2026 filing season, the actual deadline was February 2, 2026, because January 31 fell on a Saturday. Build the rule into your workflow rather than a hardcoded date, since it shifts most years the 31st doesn't land on a weekday.

Does it matter if the contractor is a corporation?

Generally yes, in the direction of not needing to send one. Payments to a corporation, including an LLC taxed as a C or S corporation, are exempt from 1099-NEC reporting. The carve-out that trips up firms: attorneys' fees. Legal service payments of $2,000 or more get a 1099-NEC even when the law firm is incorporated. Pull the contractor's W-9 at intake, not at year-end, so the entity type is already on file instead of reconstructed under deadline pressure.

What happens if you send it late or skip it?

Late or missing 1099-NECs carry per-form penalties that scale with how late the correction lands, on top of exposing the underlying deduction to scrutiny if the payment was claimed as a business expense without a matching information return. The fix is procedural: capture the W-9, the running total paid, and the service category at the point of payment, not in a January scramble.

Where this actually breaks at scale

The $2,000 threshold, the January 31 deadline, and the corporate carve-out are each simple on their own. The failure mode at volume isn't understanding them, it's tracking hundreds of vendor payments against them without a system built for it. Firms weighing how to add that capacity, hiring, outsourcing the prep work, or automating the tracking and form generation, are choosing between routes with different cost and control tradeoffs. We lay them out side by side in tax preparation outsourcing for CPA firms.