IRS Form 1099-NEC

Form 1099-NEC is the IRS information return used by businesses to report payments of $600 or more in nonemployee compensation to independent contractors and other non-employees. It replaced the use of Box 7 on Form 1099-MISC for reporting contractor payments starting in tax year 2020.

The form informs both the IRS and the payee of income that is generally subject to income tax and self-employment tax. If you hire contractors in the U.S., understanding when and how to file the 1099-NEC is essential for staying compliant.

What is Form 1099-NEC?

Form 1099-NEC (Nonemployee Compensation) is an IRS information return businesses use to report payments made to independent contractors, freelancers, and other non-employees when total payments for services equal $600 or more in a calendar year — or when any federal income tax was withheld under backup withholding rules.

The form focuses only on nonemployee compensation, which simplifies reporting for both payers and recipients. Payers should collect Form W-9 from each contractor to capture their legal name, taxpayer identification number (TIN), and entity type before issuing a 1099-NEC. Recipients must report 1099-NEC income on their tax returns even if they don't receive a copy of the form.

Who uses Form 1099-NEC?

• Businesses and payers: Any business, nonprofit, or individual that pays $600 or more to a non-employee for services during the tax year must file.
• Independent contractors and freelancers: Recipients use the form to report income on Schedule C and calculate self-employment tax.
• Payroll and finance teams: Responsible for collecting W-9s, preparing forms, and meeting filing deadlines.
• Accountants and tax preparers: Use the form to reconcile contractor payments and ensure accurate tax filings.

Key facts

• Filing threshold: Report nonemployee compensation of $600 or more in a calendar year, or any amount subject to backup withholding.
• Deadline: Furnish Copy B to recipients and file Copy A with the IRS by January 31. Always confirm the current-year deadline on IRS.gov.
• Replaced Box 7 on 1099-MISC: Starting tax year 2020. Form 1099-MISC remains for rents, royalties, attorney fees, and other payment types.
• Filing method: File electronically via the IRS FIRE system or through an authorized third-party filer. Paper forms require special IRS-scannable stock.
• Required data: Payer and recipient name, SSN or EIN (TIN), amount paid (Box 1), and any federal income tax withheld.

How to fill out a 1099-NEC

1. Collect the contractor's W-9. Before issuing any payment, have the contractor complete a W-9 with their legal name, TIN, and entity type. This confirms whether the recipient is exempt from 1099 reporting (e.g., most C-corporations).
2. Enter payer information. Fill in your business name, address, and TIN in the payer section of the form.
3. Enter recipient information. Add the contractor's name, address, and TIN from their W-9.
4. Report compensation in Box 1. Enter the total nonemployee compensation paid during the calendar year.
5. Report backup withholding if applicable. If you withheld federal income tax under backup withholding rules, enter the amount in the appropriate box.
6. Distribute copies. Furnish Copy B to the recipient and file Copy A with the IRS by the deadline.

How to file a 1099-NEC

1. Prepare your forms. Use IRS-approved software, an authorized e-file provider, or Deel's Taxes tab to generate 1099-NEC forms from your contractor payment records.
2. File electronically. Submit Copy A to the IRS through the FIRE system or an authorized e-file provider. Electronic filing is required if you are filing 10 or more information returns.
3. Furnish to recipients. Send Copy B to each contractor by January 31 so they can report the income on their tax return.

Penalties and common errors

• Late filing or failure to file: Penalties range from $60 to $310 per form depending on how late the filing is, with higher penalties for intentional disregard. Check IRS instructions for current penalty amounts.
• Incorrect TIN or name: Mismatched information triggers IRS notices. Always verify against the contractor's W-9.
• Filing on paper without scannable forms: The IRS rejects photocopied or printed forms. Use official IRS-scannable stock or file electronically.
• Confusing 1099-NEC with 1099-MISC: Use the 1099-NEC for nonemployee compensation and 1099-MISC for rents, royalties, and other payment types.

1099-NEC vs 1099-MISC

• 1099-NEC: Used exclusively to report nonemployee compensation — payments to contractors, freelancers, and other non-employees for services.
• 1099-MISC: Used to report other types of payments including rents, royalties, prizes, awards, attorney fees (Box 10), and medical/healthcare payments.
• Key difference: Before 2020, contractor payments were reported in Box 7 of the 1099-MISC. The IRS split this into a separate form (1099-NEC) to simplify reporting and align the deadline for contractor payments.

Read more in Form 1099-NEC vs Form 1099-MISC.

Example

A design agency pays a freelance web developer $7,200 in 2025 for contract work. The agency collects a completed Form W-9 from the developer, issues a 1099-NEC showing $7,200 in Box 1 (Copy B) to the contractor, and files Copy A with the IRS by January 31 — either electronically or through an authorized provider. The developer then reports the income on Schedule C when filing their tax return.

Related terms

• Form 1099-MISC
• Freelancer
• Form W-9
• Common tax deductions for independent contractors
• Manage 1099s with Deel

FAQ

What is Form 1099-NEC used for? To report payments of $600 or more in nonemployee compensation to contractors and other non-employees to the IRS and the payee.

What 1099 form do I give an independent contractor? Use Form 1099-NEC to report contractor payments. Confirm the contractor's entity type on their W-9 first, since most C-corporations are exempt.

How do I file a 1099-NEC? File Copy A with the IRS electronically via the FIRE system or through an authorized e-file provider, and furnish Copy B to the recipient by January 31.

How do I fill out a 1099-NEC? Enter the payer and recipient names and TINs from the W-9, report nonemployee compensation in Box 1, and note any federal income tax withheld in the backup withholding box.

Where can I get official 1099-NEC forms? Download official PDFs and instructions from IRS.gov or order scannable paper forms from the IRS for paper filing.