If you received a Form 1099-NEC, it reports income you earned as an independent contractor, freelancer, consultant, or other nonemployee. In most cases, this income is considered self-employment income and must be reported on your federal tax return.
What Is Form 1099-NEC?
Form 1099-NEC (Nonemployee Compensation) is used to report payments made to individuals and businesses that are not employees. For tax year 2026, businesses generally issue Form 1099-NEC when they pay $2,000 or more in nonemployee compensation during the year. This reporting threshold increased from $600 beginning with tax years after 2025.
Common recipients include:
- Independent contractors
- Freelancers
- Consultants
- Self-employed professionals
- Certain attorneys and corporations that require reporting
Important Program Limitation
Our program allows you to enter and report a Form 1099-NEC that you received, but it does not support creating, preparing, or issuing Form 1099-NEC for contractors or other taxpayers.
If you need to issue a 1099-NEC to someone you paid, you'll need to use IRS-approved filing methods or another provider that supports information return filing.
What Is Reported in Box 1?
Nonemployee compensation belongs in Box 1 when all of the following apply:
- The total payments meet the applicable reporting threshold for the tax year.
- The recipient is not your employee.
- The payments were made in the course of a trade or business (including nonprofit and government activities).
- The payment was made to an individual, partnership, estate, or certain corporations that require reporting.
Examples of income commonly reported in Box 1 include:
- Contract labor payments
- Fees and commissions
- Professional service payments
- Prizes and awards for services performed
- Attorney fees
- Certain oil and gas working interest payments
- Fish purchases paid in cash
Self-Employment Tax and Form 1099-NEC
Most income reported in Box 1 is subject to self-employment tax in addition to regular income tax.
If you're self-employed, you'll generally:
- Report the income on Schedule C, Profit or Loss From Business.
- Deduct any ordinary and necessary business expenses related to earning that income.
- Calculate self-employment tax on Schedule SE.
In some situations, income may not be subject to self-employment tax. If the payment doesn't qualify as nonemployee compensation, it may be reported on a different information return, such as Form 1099-MISC.
What's New for Tax Year 2026?
Several changes affect 2026 information returns filed in 2027:
- The general reporting threshold for many Forms 1099, including Form 1099-NEC, increased to $2,000 for tax years beginning after 2025.
- Form 1099-NEC continues to include reporting requirements for certain specialized payments, including excess golden parachute payments reported in designated boxes on the form.
State Income and Withholding Information
Most Forms 1099-NEC do not include state withholding information.
If your form does include state withholding:
- Enter the state withholding amount exactly as shown.
- You'll generally need the payer's state identification number if state withholding is reported.
- Contact the payer if required state information is missing.
If no state withholding is shown on your form, you can usually leave the state reporting section blank.
How to Enter Form 1099-NEC in the Program
Follow these steps to report your Form 1099-NEC:
- Go to the Federal section.
- Select Income.
- Choose 1099-NEC from the list of available forms.
- Enter the information exactly as it appears on your Form 1099-NEC.
- Continue through the interview to complete any required self-employment reporting.
Once entered, the program will determine whether the income belongs on Schedule C and whether self-employment tax applies based on your responses.
Can I File Forms 1099-NEC for Contractors I Paid?
No. Our software does not support preparing or issuing Forms 1099-NEC for contractors, vendors, or other service providers.
You can only report a Form 1099-NEC that you received as part of your tax return. Please refer to this article to learn how to issue 1099-NECs with the IRS.