Do I Need to Send a 1099 in 2026? A Simple Guide for Small Business Owners

⭐ Who Needs a 1099? A Simple 2026 Guide for Business Owners

(Updated with the newest IRS rules for 2026)

If you run a business, you’ll probably deal with 1099 forms at some point. The rules can feel confusing, but don’t worry — here’s an easy, friendly guide to help you understand who should get a 1099 in 2026. Let’s break it all down in plain English 😊

💡 Who Should Get a 1099?

If your business paid $600 or more to a non-employee during the year, you usually have to send them a 1099-NEC. This includes:

• Freelancers

• Independent contractors

• Consultants

• Single-member LLCs

• Unincorporated businesses

• Attorneys (even if they’re incorporated!)

You’ll use:

• Form 1099-NEC → payments for services

• Form 1099-MISC → rent, prizes, royalties, and certain attorney payments

👉 Simple rule: If they’re not your employee and you paid them $600+ for business reasons, you probably need to send a 1099.

🚫 Payments That Do NOT Require a 1099

1. Credit Cards, Debit Cards, PayPal (Goods & Services), Stripe, Square 💳

If you pay someone through a credit card or a merchant-style platform (like PayPal Goods & Services, Stripe, Square, Venmo Business), you do not issue a 1099-NEC or 1099-MISC.

These companies handle their own reporting using Form 1099-K.

🔎 2026 1099-K Rule (Finalized)

Payment apps must send a 1099-K when payments to someone are $600 or more, no matter how many transactions.

This does not change your 1099-NEC responsibilities — it just affects whether the payment platform sends a 1099-K.

2. Payments by Zelle, ACH, Wire, or Check 📬

This is a big one people misunderstand.

Zelle does NOT send 1099-K forms. Neither do banks for:

• ACH transfers

• Wire transfers

• Checks

So if you paid someone $600 or more using Zelle, bank transfer, or check, YOU must issue the 1099-NEC, just like always.

3. Reimbursements With Receipts 📑

If someone buys something for your business and you reimburse them with receipts and they don’t profit from it, that amount does not go on a 1099.

If they don’t give receipts or an expense report?👉 Then the full amount may count as income and should be included on the 1099.

4. Payments to Corporations 🏢

Most payments to C-Corps and S-Corps do not need a 1099.

But two exceptions always require one:

• Payments to attorneys

• Payments for medical or healthcare services

5. Payments to Employees 👥

Employees get a W-2, not a 1099.

If you’re unsure whether someone is an employee or contractor, please ask — the IRS penalties are no joke.

📦 What About Products or Goods?

If you’re buying goods, materials, or products only, you generally do not issue a 1099.

1099s are mainly for services and certain special payments.

🤔 Not Sure If You Need to Send a 1099?

We know these rules can get confusing.Please reach out — we’re always happy to help and make sure you stay compliant and stress-free.

📅 Looking Ahead: What Might Change After 2026?

Here’s what we know today:

✔ 1099-K threshold

This is final:

• 2026 and later → $600 threshold, no transaction minimumPayment platforms must follow this.

✔ 1099-NEC/1099-MISC threshold

Congress has proposed raising the $600 threshold to about $2,000 starting in 2026, with inflation adjustments in future years.But as of now:

👉 This is NOT yet final.👉 For 2026, the 1099-NEC and 1099-MISC threshold stays at $600.

We’ll update clients the moment anything changes.