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?
- 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.
- 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.
What's New for Tax Year 2026?
- 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.
How to Enter Form 1099-NEC in the Program
- 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.
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.