Form 1099-NEC reports payments of $600 or more to nonemployees for services performed in the course of a trade or business. Businesses issue it to contractors, freelancers, and other independent service providers.
Types of Services That Require a 1099-NEC
Freelance or Contract Work
Examples include writing, graphic design, software development, or consulting. For instance, a business that pays a freelance writer $1,000 for blog content must issue this form.
Professional Services
This covers accountants, attorneys, or architects hired on a contract basis. For example, a small business paying an independent CPA $700 for tax preparation must report it.
Gig Economy Services
These include work arranged through ridesharing or delivery platforms. As an example, paying an independent delivery driver for contract work outside a platform requires reporting.
Maintenance and Repair
Cleaning services, repairs, or landscaping provided by independent workers qualify. For instance, hiring a handyman to fix office equipment triggers the requirement.
Consulting and Advising
Payments to business strategy consultants, marketing advisors, or project managers must be reported. A marketing consultant paid $2,000 for a campaign strategy is a clear case.
Creative and Artistic Work
Musicians, photographers, videographers, and artists fall under this rule. For example, a photographer paid $800 for a photoshoot would receive a 1099-NEC.
Exceptions: When You Don’t Use Form 1099-NEC
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Employees – Report employee pay on Form W-2, not Form 1099-NEC.
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Corporations – Payments to C or S corporations are generally excluded, except for certain legal or medical services.
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Goods and Materials – Purchases of tangible products or materials are not reported.
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Rent and Royalties – Report rent on Form 1099-MISC and royalties over $10 there as well.
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Personal Payments – Payments for purely personal services are excluded unless tied to a trade or business.
Common Threshold
You must file Form 1099-NEC if total payments to a single payee reach $600 or more in a tax year.