Handling 1099 vendors: from the W-9 to filing in 2027

Start with the W-9

Almost every January 1099 problem starts with a payment made in March to someone whose details nobody collected. The fix is a rule: no W-9, no first payment.

Form W-9 gives you the contractor's legal name, business name if different, federal tax classification (individual, LLC, C or S corporation, partnership), address, and taxpayer identification number (TIN): a Social Security number or an employer identification number. The contractor signs it to certify the TIN is correct. You keep it; it does not go to the IRS. Foreign contractors give you a Form W-8 instead, and different rules apply.

• Ask before the first payment, when the contractor wants to get paid and will send it quickly.
• Read the tax classification box. It tells you whether the payee is a corporation, which usually means no 1099-NEC (see below).
• Check the name and TIN against what the W-9 says, and enter them exactly. If you are registered for IRS e-Services, the IRS TIN Matching program lets you check a name and TIN combination against IRS records before you file.
• Ask for a new W-9 when a contractor changes name, business structure or address.

Who gets a 1099-NEC

For payments made in 2026, you file a 1099-NEC for each person you paid $2,000 or more during the year for services in the course of your business who is not your employee. The threshold was $600 before 2026; the IRS says it may be adjusted for inflation from 2027. See 1099-NEC vs 1099-MISC for rent, royalties and the other boxes.

Two more points. Only payments for services in your trade or business count; paying a contractor to fix your own home does not. And payments for merchandise, freight and storage are not reported on the 1099-NEC.

A worked example

A small design studio looks at its 2026 contractor payments in December:

The web developer was paid $2,400 in total, but the $900 paid by card is reported by the card processor, so the studio's own reportable total is $1,500, under the threshold. The copy editor still owes tax on the $1,950; the threshold is about who files a form, not what is taxable.

When a contractor won't give a TIN

If a contractor does not give you a TIN, or the IRS tells you the TIN is wrong, you may have to start backup withholding: keep back 24% of reportable payments and send it to the IRS. The $2,000 threshold applies to backup withholding on these payments too. Withheld amounts are deposited like other federal taxes, reported annually on Form 945, and shown on the contractor's 1099-NEC.

Most contractors hand over a W-9 quickly once they learn the alternative is a smaller payment. Still file the 1099-NEC for anyone over the threshold even without a TIN; leave the TIN box blank rather than skip the form.

Filing in 2027

• Due date: 1099-NEC copies go to contractors and to the IRS by February 1, 2027 (January 31 is a Sunday). There is no automatic extension for the 1099-NEC.
• Paper or electronic: if you file 10 or more information returns in total, counting W-2s and all 1099s together, you must e-file. Paper filers send the official scannable Copy A with Form 1096; a copy printed on plain paper is not accepted for Copy A.
• IRIS is now the only IRS e-file route. The older FIRE system took its last filings on November 19, 2026. From 2027, tax year 2026 returns and corrections go through IRIS, either the free IRIS Taxpayer Portal (up to 100 returns at a time) or a filing service that transmits through IRIS. Filing yourself needs an IRIS Transmitter Control Code, so apply now; it can take weeks.
• Penalties are charged per form. For returns due in 2026 they were $60 if up to 30 days late, $130 if later but by August 1, and $340 after that or if never filed. The IRS had not published the 2027 amounts when we checked; they rise with inflation most years.

Fixing a mistake

Mistakes found after filing are corrected by filing a corrected return and giving the contractor a corrected copy. The IRS splits them into two kinds:

• Wrong amount (or code or checkbox): file one return marked "CORRECTED" with the right figures.
• Wrong or missing TIN, wrong name, or the wrong form: two steps. File a corrected return with the original details and zero amounts, then file a new original return with the right details.

Corrections to returns you e-filed go through IRIS too. Source for this section and the TIN rules: IRS General Instructions for Certain Information Returns and the Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026).

In AcboBooks

Tick the 1099 box on each contractor's vendor record and type the TIN and address from their W-9. The 1099-NEC wizard totals each flagged vendor's cheques and bill payments for the year, uses the $2,000 threshold for 2026 (you can change it), flags anyone missing a TIN, and prints a 1099-NEC for each vendor to give the contractor. Charges entered as credit card charges are left out, but a bill paid from a credit card account is counted, so check card-paid bills before you file. AcboBooks does not e-file: you enter the figures in IRIS or give them to a filing service, and it does not store W-9s or run backup withholding.

The 1099 run is one line on our year-end closing checklist.