How to File 1099s for Your Contractors

File 1099-NEC forms for contractors paid $600+ in 2025, due January 31, 2026 to recipients and IRS.

1. Identify which contractors require 1099s. Pull your contractor payments for 2025 and flag anyone paid $600 or more total. Exclude payments to corporations (C-corps and S-corps) unless they provided legal services. LLCs, sole proprietors, and partnerships all need 1099s regardless of payment amount over $600.
2. Gather W-9 forms from qualifying contractors. Contact contractors missing W-9s immediately — you need their legal name, address, and TIN (SSN or EIN). If a contractor won't provide a W-9, withhold 24% backup withholding on future payments. You can still file the 1099 with their business name and address from your records.
3. Calculate total payments per contractor. Sum all payments made to each contractor in 2025, including fees, bonuses, and reimbursements for materials they purchased. Exclude mileage reimbursements at IRS rates and direct expense reimbursements with receipts. Report the gross amount before any taxes or fees you withheld.
4. File 1099-NEC forms by January 31. Submit Copy A to the IRS and Copy B to contractors by January 31, 2026. File electronically if you have 250+ forms (required) or use paper forms for smaller volumes. Include Form 1096 as your transmittal summary when filing paper forms with the IRS.
5. Keep records and handle corrections. Retain copies of all 1099s and supporting W-9s for four years. If you discover errors after filing, submit corrected 1099s marked 'CORRECTED' as soon as possible. Late filing penalties start at $50 per form, reaching $280 per form if filed more than 30 days late.