The deadline is January 31. That applies both to sending the 1099-NEC to your contractors and to filing the forms with the IRS. There is no automatic extension for 1099-NEC filings, so this date is firm.

You need to issue a 1099-NEC to any person or business you paid $600 or more during the calendar year for services, as long as they are not a C corporation or S corporation. This includes independent contractors, freelancers, subcontractors, and most LLCs. Sole proprietors, partnerships, and single-member LLCs all need to receive one if they hit the $600 threshold. Payments for materials or products don’t count. It’s specifically for services rendered.

The most important thing you can do is collect a W-9 from every contractor before you pay them. The W-9 gives you their legal name, business name, tax identification number, and entity type. Without this information, you cannot prepare a 1099. Chasing contractors for W-9s in January when you’re trying to meet the deadline is stressful and often unsuccessful. People ignore emails, change phone numbers, or simply don’t respond. Get the W-9 before the first payment goes out.

If you pay a contractor by credit card or through a payment platform like PayPal, Venmo (business), or Square, you generally do not issue a 1099-NEC for those payments. The payment processor handles the reporting on a 1099-K instead. Payments by check, ACH, cash, or direct bank transfer are your responsibility to report.

Penalties for late or missing 1099s range from $60 to $310 per form depending on how late you file, with a maximum penalty that can reach over $1 million for larger businesses. Even if you’re a small operation with a handful of contractors, the penalties add up quickly if the IRS notices the gap.

Keep a running list throughout the year of every contractor you pay. Track the total amount paid and confirm you have a W-9 on file for each one. Waiting until January to figure out who you owe 1099s to means you’re reconstructing a year’s worth of payments under a tight deadline. Reviewing this quarterly takes five minutes and saves you a scramble later.

If your contractors also received payments from you for different types of income, like rent for example, that gets reported on a 1099-MISC instead of a 1099-NEC. The 1099-MISC has a different filing deadline of February 28 for paper filing or March 31 for electronic filing. But for straightforward contractor payments, 1099-NEC and the January 31 deadline are what matter.

Getting your small business tax returns right starts with accurate 1099 reporting. If the IRS sees your business claimed $80,000 in contractor expenses but you only filed 1099s for $30,000, that raises questions. Keeping clean records throughout the year makes January simple. If you have more than a few contractors, our 1099 preparation service handles the entire process so nothing falls through the cracks.