Your complete guide to 1099 classifications, thresholds, deadlines, and new IRS rules for the 2025 filing season.

⚠️Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization’s internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.  

If your business works with contractors, vendors, gig workers, service providers, or attorneys, you’re already familiar with the 1099 landscape. Reporting for 2025 year-end (filed in 2026) will be uniquely challenging:

• The 1099-K threshold rollback under the One Big Beautiful Bill Act (OBBBA) changes reporting expectations again
• The IRS updated multiple 1099 forms in April 2025, moving certain boxes and adding new codes
• E-filing rules are stricter, requiring electronic filing for nearly every employer
• Deadlines shift in 2026 because January 31 falls on a Saturday
• State filing rules continue to diverge, especially for 1099-K and 1099-NEC

This guide breaks down every major 1099 your business might need to file.

Table of Contents

• The Purpose of 1099 Forms
• 1. Form 1099-NEC (Nonemployee Compensation)
• 2. Form 1099-MISC (Miscellaneous Income)
• 3. Form 1099-K (Third-Party Payment Networks)
• Where and When to File Forms 1099
• State Filing Requirements & the CF/SF Program

The Purpose of 1099 Forms

The 1099 form series reports non-employee income — money paid to individuals or businesses who are not your employees.

Common examples include:

• Independent contractors
• Freelancers and consultants
• Landlords receiving rent
• Attorneys
• Gig workers
• Vendors paid outside payroll

While there are many 1099 variants, these three cause the most confusion:

Let’s break down each form and when to use it.

1. Form 1099-NEC (Nonemployee Compensation)

Use this form if you paid:

1. Contractors
2. Freelancers
3. Consultants
4. Gig workers (paid directly, not through a platform)
5. Attorneys for services
6. Vendors performing services

You must file Form 1099-NEC if all of the following are true:

1. The recipient is not your employee
2. The payment was for services
3. You paid via cash, check, ACH, or direct invoice
4. You paid $600 or more during the tax year (threshold scheduled to increase to $2,000 for 2026 under current law)
5. The payment was made in the course of your trade or business

(Specific Instructions for Form 1099-NEC)

What’s Reported Where?

• Box 1: Total nonemployee compensation
• Box 4: Federal income tax withheld (backup withholding)
• Boxes 5–7: State information
• NEW Box 3 (2025 revision): Excess Golden Parachute Payments (previously on 1099-MISC Box 14)

Important Note: 1099-NEC vs. 1099-K

If a contractor is paid by credit card, debit card, PayPal, Venmo Business, Square, Stripe, Etsy, etc.:

• You do not issue a 1099-NEC for those payments
• The payment platform is responsible for issuing Form 1099-K if thresholds are met

2. Form 1099-MISC (Miscellaneous Income)

Form 1099-MISC covers non-service payments not reported on other 1099 forms. A form must be issued when:

• At least $10 in royalty payments (Box 2), or
• At least $600 in any of the following:
  • Rents (Box 1)
  • Prizes and awards, including certain non-government grants (Box 3)
  • Other income payments (Box 3)
  • Cash from a notional principal contract to an individual, partnership, or estate (Box 3)
  • Fishing boat proceeds (Box 5)
  • Medical and health care payments (Box 6)
  • Crop insurance proceeds (Box 9)
  • Gross proceeds paid to an attorney (Box 10)
  • Section 409A deferrals (Box 12)
  • Nonqualified deferred compensation (Box 15)

(Specific Instructions for Form 1099-MISC)

2025 Revision: Reporting Change

• Box 14 previously captured Excess Golden Parachute Payments
• Starting with the 2025 revision, Box 14 is reserved and those payments are reported on Form 1099-NEC Box 3

3. Form 1099-K (Third-Party Payment Networks)

This form has caused the most confusion in recent years.

What Is Reported on 1099-K?

A 1099-K is issued when a third-party settlement organization (TPSO) processes payments for goods or services.

Examples: PayPal, Venmo (business transactions), Square, Stripe, Etsy, eBay, Uber, Lyft, DoorDash.

If they process the payment, they report it.

What is NOT Reported on 1099-K

• Personal transfers
• Reimbursements between friends
• Selling personal items at a loss
• Shared expenses or split checks

(Instructions for Form 1099-K)

2026 Threshold: OBBBA Reinstates Original Rules

According to the IRS News Release (IR-2025-107, Oct 23, 2025), a Form 1099-K is required only if both conditions apply:

• More than 200 transactions, AND
• More than $20,000 in gross payments

This reverses the previously scheduled $600 threshold. Some states (for example MA, VT, VA) maintain different thresholds and may require reporting at lower levels.

Example: Contractor Paid via PayPal

If you pay a contractor through PayPal or another TPSO, the TPSO is responsible for issuing tax forms (typically Form 1099-K) if thresholds are met.

Other 1099s Your Business May Encounter

Beyond 1099-NEC, 1099-MISC, and 1099-K, many organizations must issue additional 1099s for investment income, cooperative distributions, or real estate activity.

Form 1099-B – Proceeds from Broker and Barter Exchange Transactions

Reports sales of stock, securities, commodities, and certain barter exchange transactions. (IRS: About Form 1099-B)

Form 1099-C – Cancellation of Debt

Used when a financial entity cancels $600 or more of a borrower’s debt after a triggering event. The canceled amount is generally treated as income. (IRS: About Form 1099-C)

Form 1099-DIV – Dividends and Distributions

Reports dividends and other distributions paid to investors. (IRS: About Form 1099-DIV)

Form 1099-INT – Interest Income

Issued by financial institutions to report interest income, generally when a recipient earns at least $10. (IRS: About Form 1099-INT)

Form 1099-PATR – Taxable Distributions From Cooperatives

Used by cooperatives to report patronage dividends and other distributions, typically when at least $10 in qualifying distributions is made. (IRS: About Form 1099-PATR)

Form 1099-R – Distributions from Retirement Accounts

Reports distributions of $10 or more from retirement arrangements. Recent updates include Code Y in Box 7 for qualified charitable distributions. (IRS: About Form 1099-R)

Form 1099-S – Proceeds from Real Estate Transactions

Used to report proceeds from certain real estate transactions. (IRS: About Form 1099-S)

*Important note: 1099-S (Timber Royalties >$10) is due to recipients on January 31 each year. 1099-S (Proceeds from Real Estate Transactions >$600) is due to recipients on February 15 each year.

Important Note on Other 1099 Variants

The IRS 1099 series includes more than 20 different form types, each with its own filing rules and thresholds. The list above focuses on forms Greenshades supports for electronic filing but is not exhaustive. For complete information, see the IRS Information Returns overview.

Where and When to File Forms 1099

The IRS accepts nearly all information returns electronically through two systems:

Transition note: The IRS plans to retire FIRE after Filing Season 2027 (Tax Year 2026). IRIS will become the primary and sole system for all information returns after that.

What is a TCC code?

To file through IRIS, FIRE, or AIR, you need a Transmitter Control Code (TCC). A TCC is a unique ID issued by the IRS that identifies approved transmitters of electronic information returns. Greenshades is an IRS-approved transmitter.

Key Deadlines for 2025 Year-End (Filed in 2026)

February 2, 2026 (Because January 31 is a Saturday)

• 1099-NEC – to recipients & IRS
• 1099-MISC (with no data in Box 8 or 10) – to recipients
• 1099-DIV, 1099-C, 1099-INT, 1099-K, 1099-PATR, 1099-R, 1099-S (Timber Royalties >$10) – to recipients

February 17, 2026 (Because February 15 is a Sunday and February 16 is a federal holiday)

• 1099-MISC (with data in Box 8 or 10) – to recipients
• 1099-B, 1099-S (Proceeds from real estate transactions >$600) – to recipients

Bonus Tip: The paper filing due date for many federal information returns is February 28, but if you have 10+ total returns, the IRS now requires electronic filing

March 31, 2026

E-file deadline for many 1099 forms, including 1099-MISC, 1099-DIV, 1099-C, 1099-K, 1099-PATR, 1099-R, 1099-B, 1099-INT, and 1099-S.

Filing Corrections

Filing corrections depends on the system used:

• FIRE → use Pub 1220 for corrections
• IRIS A2A → follow Pub 5718 rules
• IRIS Portal/CSV → follow Pub 5717 guidance

Best practices:

• Correct errors as soon as discovered
• Do not resend your entire file
• Maintain consistent payee identifiers
• Keep copies of all filings (original + corrected)

State Filing Requirements & the CF/SF Program

State 1099 rules vary. Some states require separate filings. Many states participate in the Combined Federal/State Filing (CF/SF) program. If you file electronically with the IRS and the state participates, the IRS automatically forwards the information to the state.

However:

• Not all states participate
• Some participating states still require separate filings for state withholding
• Not every 1099 form is accepted by every state; currently the IRS accepts Forms 1099-B, 1099-DIV, 1099-G, 1099-INT, 1099-K, 1099-MISC, 1099-NEC, 1099-OID, 1099-PATR, and 1099-R

Confirm details and check state participation via IRS Publication 1220.

How Greenshades Simplifies 1099 Filing

Greenshades provides a year-end platform designed to reduce errors and keep employers compliant with changing IRS rules.

Key Capabilities

• Error validation checks before submission
• Automatic updates for 2025–2026 form revisions
• Supports both IRIS and CF/SF filing
• Eliminates the need for businesses to maintain their own TCC
• Bulk import directly from payroll and accounting systems

With Greenshades, you can reduce manual entry, prevent common mistakes, and ensure timely delivery of 1099s.