1099-NEC vs 1099-MISC: which form, and the new $2,000 threshold
Which form to use for contractors, rent and other payments, the thresholds for payments made in 2026 after the One Big Beautiful Bill Act, and the exceptions that stayed.
6 min read · October 17, 2026
The short answer
Paid someone who is not your employee for services? That is a 1099-NEC. Paid rent, royalties, prizes, medical or health care payments or attorney gross proceeds? That is a 1099-MISC. Payments to corporations are usually exempt, with exceptions for attorneys and medical payments.
1099-NEC: contractors
Form 1099-NEC reports nonemployee compensation: fees, commissions and other payments for services by people who are not your employees. Freelancers, sole-proprietor tradespeople, consultants, single-member LLCs taxed as sole proprietorships and partnerships all usually get one.
- Threshold for payments made in 2026: $2,000 or more in the year.
- Due to the contractor and the IRS by February 1, 2027 (January 31 is a Sunday).
- Payments made by credit card or through a payment app such as PayPal are reported by the processor on Form 1099-K, not by you on a 1099-NEC.
1099-MISC: everything else
Form 1099-MISC covers payments that are not for services. For 2026 the thresholds differ by box:
| Payment | Report if the year's total is |
|---|---|
| Rents (box 1) | $2,000 or more |
| Royalties (box 2) | $10 or more |
| Other income, prizes, awards (box 3) | $2,000 or more |
| Fishing boat proceeds (box 5) | Any amount |
| Medical and health care payments (box 6) | $2,000 or more |
| Gross proceeds paid to an attorney (box 10) | $600 or more |
Recipient copies are due February 1, 2027 (February 16 if box 8 or 10 is used). The IRS copy is due March 1, 2027 on paper or March 31, 2027 electronically.
The $2,000 threshold
The One Big Beautiful Bill Act raised the general reporting threshold for 1099-NEC and most 1099-MISC boxes from $600 to $2,000 for payments made after December 31, 2025. The IRS says it may be adjusted for inflation starting in 2027. Backup withholding (24%) follows the same $2,000 threshold.
Two things did not change: the $10 threshold for royalties and the $600 threshold for attorney gross proceeds. And the threshold is about reporting, not taxation: contractors owe tax on every dollar whether or not they receive a form.
Still collect a W-9 from every contractor before the first payment. You will not know in February who crossed $2,000 by December.
What about 1099-K?
Form 1099-K is issued by payment processors and marketplaces, not by you. The law change also restored its threshold to more than $20,000 and more than 200 transactions for third-party settlement organizations such as payment apps. Card processors report regardless of amount.
1099s from the payments you already made
Mark contractors as 1099 vendors, pay them as usual, and the AcboBooks 1099-NEC wizard lists everyone over the threshold at year-end.
This article is general information, not tax, legal or accounting advice. Rules and dates change; check the official source or ask your accountant before acting.