Glossary / 1099-NEC · Also called Form 1099-NEC, Nonemployee compensation

How it works

You collect a Form W-9 from each contractor when you start working with them, which gives you their legal name, tax ID and whether they are a corporation. Payments to most corporations do not need a 1099-NEC, but payments to attorneys generally do. Rent and other non-service payments go on Form 1099-MISC instead.

Payments made by credit card or through a payment network such as a card processor are reported by the processor on a 1099-K, so you leave them off your 1099-NEC. If a contractor will not give you a tax ID, you may have to start backup withholding.

Worked example: Which contractors get a form for 2026

A marketing agency paid four contractors in 2026: a designer $8,500 by check, a photographer $1,800 by check, a copywriter $3,000 by card, and an incorporated web firm $12,000. Only the designer gets a 1099-NEC. The photographer is under $2,000, the card payments are reported on a 1099-K by the processor, and the web firm is a corporation.

Payee	Paid	1099-NEC?
Designer (sole proprietor)	$8,500 by check	Yes
Photographer	$1,800 by check	No, under $2,000
Copywriter	$3,000 by card	No, card payments go on 1099-K
Web firm (corporation)	$12,000	No, corporation

In the US and in Canada

In Canada

Canada's closest equivalents are the T4A for fees for services in some cases and the T5018 for construction subcontractors.

In AcboBooks

Mark a vendor as a 1099 vendor and AcboBooks totals their payments for the year. The 1099-NEC wizard lists every contractor over the threshold, lets you fill in a missing tax ID or address on the spot, and prints the forms. It does not e-file them with the IRS.

Related terms

Related on this site

Sources

Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.

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1099-NEC