Filing Requirements for Contractors and 1099 Vendors
Almost nobody runs into 1099 problems in January.
They run into them in June, when a project comes up, someone gets hired to handle it, gets paid, and nobody collects a single piece of paperwork.
Then filing season arrives, and the information you need is spread across six email threads and a stack of invoices. One contractor has moved. Another isn't answering.
The work of filing correctly happens long before the forms are due.
The Paperwork Starts Before the First Payment
Get a completed W-9 from every contractor and vendor before you pay them for the first time.
Not after the project wraps.
Not in December.
A W-9 gives you the legal name, business structure, address, and taxpayer identification number you need for filing.
Asking for it upfront is normal, and anyone who regularly works with businesses should have one ready to send.
Once you've paid someone, you've lost some of your leverage to ask for the paperwork.
So make the W-9 part of your onboarding process, right alongside the signed agreement and direct deposit information.
Not Every Payment Gets a 1099
The general reporting rule has changed.
For payments made in 2026, if you pay an unincorporated contractor or vendor $2,000 or more during the calendar year for services, you generally file a Form 1099-NEC. The threshold was $600 for 2025 and earlier, with the threshold scheduled to adjust for inflation beginning in 2027.
But plenty of payments fall outside that general rule, including:
Payments to corporations, with certain exceptions such as attorneys and medical providers
Gross proceeds paid to an attorney, which remain reportable at $600
Royalties, which remain reportable at $10
Payments for goods and merchandise rather than services
Payments made through a third-party settlement network that issues its own 1099-K
Rent, royalties, and certain other categories that may be reported on Form 1099-MISC instead
The W-9 answers many of these questions for you, which is one more reason to collect it early.
Classification Is the Part That Carries Real Risk
This is the genuinely hard part, and it's where good-faith mistakes happen most often.
Whether someone is a contractor or an employee isn't a matter of preference. It's also not settled by what the invoice says.
It comes down to factors such as how much control you have over how, when, and where the work gets done.
If you set someone's hours, supervise their day-to-day work, provide their equipment, and expect them to work only for you, a state agency or the IRS may treat that person as an employee regardless of what you call them.
Misclassification can be expensive:
Back payroll taxes
Penalties
Unpaid overtime
Potentially unpaid benefits
If you have a long-term contractor who functions like a member of your staff, that's worth a conversation with your accountant before a notice shows up.
Good Records Make January a Non-Event
Filing is much easier when three things are already true:
The W-9 is on file.
Contractor payments are coded to their own account in your books.
The vendor record matches the W-9 exactly.
That last one causes more problems than you might expect.
For example, a contractor may invoice under a business name but file taxes under a personal name. If you use the wrong name or taxpayer identification number, you could receive a mismatch notice.
Make December Your Checkpoint
Put a reminder on your calendar for early December to:
Review contractor totals for the year
Confirm you have a W-9 for everyone approaching the reporting threshold
Check that vendor records match the information on the W-9
Identify any missing or questionable information
Chasing paperwork in December is annoying.
Chasing it on January 25 is a completely different experience.
Form 1099-NEC is generally due to both the contractor and the IRS by January 31.
Final Thought
Filing a 1099 takes about five minutes when the information behind it is right.
Everything difficult about this topic happens earlier, in how you bring a contractor on and how you track what you pay them.
Get that part right, and the deadline stops being something you have to worry about.
If you're not certain every contractor you paid this year has a W-9 on file, that's an hour well spent this week.
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