Understanding the services that require a 1099 is essential for business owners, contractors, and anyone making reportable payments. The IRS requires you to issue Form 1099-NEC or 1099-MISC when you pay $600 or more in a calendar year to nonemployees for qualifying services.
By knowing which payments trigger reporting, you can stay compliant, avoid IRS penalties, and maintain accurate records.
1. Independent Contractor or Freelance Work
Payments of $600 or more for services performed by someone who is not your employee must be reported on Form 1099-NEC.
Examples include:
- Software development, app design, or IT consulting
- Writing, editing, or graphic design projects
- Videography or photography services
👉 Learn more about Form 1099-NEC reporting.
2. Professional Services
Fees paid to professionals operating as sole proprietors or partnerships also require a 1099.
Examples include:
- Attorneys and law firms (even if incorporated)
- Accountants, CPAs, and bookkeepers
- Engineers or architects
3. Gig Economy or Platform-Based Services
Payments to individuals doing gig or platform work outside of an employee relationship may be reportable.
Examples include:
- Rideshare drivers hired directly (not through Uber/Lyft’s own reporting)
- Independent delivery drivers
- Task-based services such as cleaning, landscaping, or home repairs
4. Commission Payments
Commissions paid to non-employee sales representatives are reportable on Form 1099-NEC.
Example:
- A sales commission paid to an independent agent for closing a deal
5. Prizes and Awards for Services
If an award is connected to a service performed, it qualifies as reportable nonemployee compensation.
Example:
- Paying a speaker a $1,000 honorarium for presenting at a conference
6. Other Business Services
Any other payment made in the course of your trade or business that does not fall under wages (reported on Form W-2) may require a 1099.
Examples include:
- Web hosting and online marketing consultants
- Event planners and coordinators
- Trainers or coaches providing business-related training
Key IRS Rules
To remain compliant, keep these IRS reporting rules in mind:
- Threshold: $600 or more in a calendar year
- Payment Method: Applies to check, cash, ACH, or direct deposit (payments by credit card or PayPal are often reported on Form 1099-K)
- Entity Type: Reportable for individuals, sole proprietors, partnerships, and certain LLCs — not usually required for corporations (except attorneys and some medical payments)
Bottom Line
Knowing which services require a 1099 ensures your business stays compliant with IRS rules. Whether you’re paying contractors, gig workers, professionals, or awarding commissions, proper reporting protects you from penalties and IRS scrutiny. Using 1099FIRE’s software makes it simple to generate, print, and electronically file the right forms on time.