Not tax advice. A plain-English summary for trade business owners. Confirm your own situation with your CPA.
Quick answer
For payments made in 2026, you only have to issue a Form 1099-NEC to a contractor you paid $2,000 or more, up from $600. The One Big Beautiful Bill Act raised the threshold for 1099-NEC and 1099-MISC for the first time since 1954, and starting with the 2027 tax year it will adjust for inflation.
- Deadline: February 1, 2027 for 2026 payments (January 31 falls on a Sunday).
- Card payments: still don’t go on a 1099-NEC. The processor reports them on a 1099-K, which went back to a $20,000 and 200-transaction threshold.
- The catch: the threshold is about paperwork, not taxes. A sub you paid $1,800 still owes tax on it, and your state may still want a form.
On this page
Every January, trade owners dig through a year of payments to subs, helpers, and the guy who did one drywall patch in March, trying to figure out who crossed $600. For payments made in 2026, that line moved to $2,000. Fewer forms, but a few traps come with it.
What changed
| Payments in 2025 and earlier | Payments in 2026 | 2027 and later | |
|---|---|---|---|
| 1099-NEC / 1099-MISC threshold | $600 | $2,000 | $2,000, adjusted annually for inflation |
| 1099-K (card and app payments) | $20,000 and 200 transactions (reverted retroactively) | $20,000 and 200 transactions | Same, not indexed |
| First forms affected | 1099s filed in early 2027 for 2026 payments | ||
Source: Patriot Software summary of the One Big Beautiful Bill Act changes; TaxBandits 2026 Form 1099-NEC guide. Checked November 2026.
Who gets a 1099-NEC now
You generally file a 1099-NEC for each non-employee you paid $2,000 or more during 2026 for services in the course of your business, such as:
- Subcontractors: plumbers, electricians, HVAC techs, roofers, and helpers paid as independent contractors.
- Sole proprietors and single-member LLCs taxed as sole proprietors.
- Attorneys: attorney fees of $2,000 or more get a 1099-NEC even if the firm is incorporated.
You can still file voluntarily for payees under $2,000. Some owners do it for consistency.
Payments that still don’t go on a 1099-NEC
- Card and payment app payments. If you paid a contractor by credit card or through a third-party payment network, the processor reports it on a 1099-K. Don’t double-report it on a 1099-NEC.
- Most corporations. Payments to C and S corporations are generally exempt, except attorney fees.
- Employees. W-2 employees get W-2s, never 1099s, even for bonuses.
- Goods. Payments for parts and materials alone, like a supply house, aren’t services.
- Gross proceeds paid to attorneys (as opposed to fees) go on a 1099-MISC and stay at the $600 threshold, per TaxBandits.
The 1099-K side
If your customers pay you by card or through a payment platform, your processor sends you a 1099-K only if you cross $20,000 and 200 transactions. The law rolled back the planned drop to $600 retroactively. Either way, all of that revenue is still taxable income; the 1099-K threshold only decides whether a form is sent.
Deadlines, e-filing, and penalties
| Item | For 2026 payments |
|---|---|
| Copy to contractor | February 1, 2027 |
| Copy to IRS | February 1, 2027 |
| Extension | 30 days via Form 8809; not automatic, needs a valid reason |
| E-filing | Required if you file 10 or more information returns in total; the IRS’s free IRIS portal works for small filers |
Late-filing penalties are charged per form. TaxBandits lists them for 2026 returns due in 2027:
| When filed | Penalty per form |
|---|---|
| Within 30 days late | $60 |
| 31 days late through August 1 | $130 |
| After August 1 | $340 |
| Intentional disregard | $680 |
Your state may not follow
The federal threshold changed. Your state’s may not have. Some states have their own 1099 reporting requirements and thresholds that differ from the federal one, and filling in the state boxes on a federal 1099 doesn’t automatically satisfy them. Check your state revenue department before you skip a form for someone paid between $600 and $2,000.
What this means for trade shops
- Fewer forms for one-off help. The roofer who helped on one job for $1,500 probably doesn’t need a federal 1099-NEC anymore.
- Still collect a W-9 from everyone. You don’t know in March who’ll cross $2,000 by December. Without a W-9, you may have to backup withhold, and you’ll be chasing tax IDs in January.
- Your workers’ comp auditor doesn’t care about the 1099 threshold. Payments to uninsured subs can still land on your comp payroll at audit, at any amount. See workers’ comp class codes for trades.
- The threshold doesn’t fix misclassification. If your “sub” works your hours, drives your van, and uses your tools, they may be an employee no matter what form you file. See the 1099 helper trap.
- Your own income: if you sub for other companies, you may get fewer 1099s, but all of it is still taxable. Keep your own records.
January checklist
The hardest step is the first one: a clean total of what each person was paid. If your techs and subs are paid on commission splits, VortechPro tracks the split on every job and exports to CSV, so a year-end total per person is a spreadsheet sort, not a shoebox. $99/mo for 5 techs, +$20 each.
Year-end totals without the shoebox
VortechPro automates commission splits on every job and exports to CSV. $99/mo for 5 techs, +$20 each. 30-day free trial, no contract.
