If you received a 1099-MISC instead of a 1099-NEC for work performed as an independent contractor, you should contact the payer immediately to request a correction. The payer must issue a corrected 1099-MISC ($0 income) and a 1099-NEC for the correct amount to avoid penalties, as 1099-NEC specifically reports nonemployee compensation.
If you accidentally filed Form 1099-MISC for a recipient instead of Form 1099-NEC, you'll need to void the incorrect form and then file the correct form (1099-NEC) for that recipient.
Payments to attorneys may require both forms. Gross proceeds paid to an attorney, such as services related to a specific litigation matter should be reported on Form 1099-MISC whereas attorneys' fees, such as for general business matters, should be reported on Form 1099-NEC.
The IRS introduced the 1099-NEC in 2020, which changes how business owners and tax professionals handle certain types of tax reporting.
Key Takeaways
If a business intentionally disregards the requirement to provide a correct Form 1099-NEC or Form 1099-MISC, it's subject to a minimum penalty of $660 per form (tax year 2025) or 10% of the income reported on the form, with no maximum.
If you don't get a 1099-NEC from an employer and should have, still report the amount of nonemployee compensation made.
They're both used to report income paid to nonemployees, but they serve different purposes. Form 1099-NEC is used to report payments over $600 made to nonemployees. While these payments were previously reported on the 1099-MISC, this form is used to report payments such as rent, royalties, and prizes.
The 1099-NEC will be processed and submitted in its own filing and 1096 form. Then 1099-MISC will be processed separately and submitted in its own filing and 1096 form. Aatrix data files can only be merged to submit one filing when the Form Type AND Federal ID are both the same between the data files.
Filing dates.
Section 6071(c) requires you to file Form 1099-NEC on or before January 31, using either paper or electronic filing procedures. File Form 1099-MISC by February 28, if you file on paper, or March 31, if you file electronically.
What if I didn't get a 1099-NEC or 1099-MISC, but made money from self-employment? If you weren't paid $600 or more, a business isn't required to send you a 1099-NEC or 1099-MISC, but you still need to report the income.
For paper form filing, use a regular copy of Form 1099 (either NEC or MISC) and mark the box next to “CORRECTED” at the top. Send corrected Forms 1099 to the IRS, contractor or vendor, and state agencies (if applicable). And, be ready to file a corrected Form 1096 to accompany the return you're correcting.
You must report all income you receive on your tax return. This may include the gross payment amount on Form 1099-K and amounts on other reporting documents like Form 1099-NEC or Form 1099-MISC.
The IRS requires that you report payments to your attorney for legal fees on Form 1099-NEC if the payment(s) total $600 or more. When you pay someone else's lawyer in regard to a settlement, this payment should be reported on 1099-MISC if it totals $600 or more.
The 1099-NEC is now used to report independent contractor income. But the 1099-MISC form is still around, it's just used to report miscellaneous income such as rent or payments to an attorney. Although the 1099-MISC is still in use, contractor payments made in 2020 and beyond will be reported on the form 1099-NEC.
One Big Beautiful Bill Act of 2025 increases 1099 thresholds
The OBBBA also changes the reporting threshold for Form 1099-MISC and Form 1099-NEC. Currently $600, the threshold will increase to $2,000 for tax year 2026. For 2027 and subsequent years, the threshold for both forms will be adjusted for inflation.
The IRS announced in July 2019 that, for 2020 and thereafter, it will reintroduce the previously retired Form 1099-NEC, which was last used in the 1980s. The 1099-NEC is straightforward: Box 1 is for non-employee compensation and Box 4 is for federal withholding for that contract employee.
Form 1099-MISC is used in the reporting of payments that are not subject to self-employment tax – things like rents and prizes. Form 1099-NEC is used for reporting non-employee compensation that is most likely subject to self-employment tax.
QuickBooks Payments to 1099 vendors made via credit card, debit card, or third-party system, such as PayPal, are excluded from the 1099-MISC and 1099-NEC calculations.
A 1099-MISC is a tax form that shows taxable income you received outside of work. It's specific to certain types of miscellaneous income (hence the "MISC"). This is different from cash you may have earned from a side gig or freelancing, which is reported on Form 1099-NEC (aka nonemployee compensation).
Will the IRS catch a missing 1099? The IRS knows about any income that gets reported on a 1099, even if you forgot to include it on your tax return. This is because a business that sends you a Form 1099 also reports the information to the IRS.
Yes. The IRS requires that you report all of your income, even if it's less than $600 and you didn't get a tax form for it. Follow these steps to enter your income. We'll ask you some questions to determine if your income is from self-employment or is ordinary income.
Failing to file Form 1099-NEC triggers IRS late-filing penalties, which escalate the longer the delay. Incorrect or missing names/TINs may result in matching errors and “B-Notice” notices from the IRS. Not filing may cause backup-withholding obligations and increased audit risk for businesses.
Businesses should report payments of nonemployee compensation totaling $600 or more on IRS Form 1099-NEC. This threshold increases to $2,000 beginning in 2026 and is thereafter indexed for inflation.