Form 1099-NEC reports payments to nonemployees for services. Form 1099-MISC reports other payments, such as rent, royalties, and prizes. The IRS brought back Form 1099-NEC for tax year 2020 so contractor pay would have its own form, and for 2026 both forms have a $2,000 threshold for most payment types and new boxes for cash tips and overtime.
What's the difference between 1099-NEC and 1099-MISC?
Quick answer
Form 1099-NEC reports what you paid a nonemployee for services, such as contractor, freelancer, and attorney fees. Form 1099-MISC reports other payments, such as rent, royalties, prizes, and gross proceeds paid to an attorney. For payments made in 2026, both use a $2,000 threshold for most payment types.
| Form 1099-NEC | Form 1099-MISC | |
|---|---|---|
| Reports | Nonemployee compensation for services | Rents, royalties, prizes, other income, medical payments, attorney gross proceeds |
| 2026 threshold | $2,000 (box 1a) | $2,000 for most boxes; $10 for royalties; $600 for attorney gross proceeds |
| Recipient copy due | February 1, 2027 | February 1, 2027 (February 16 if box 8 or 10 has data) |
| IRS copy due | February 1, 2027, paper or electronic | March 1, 2027 on paper; March 31, 2027 electronically |
| New boxes for 2026 | 1b, 1c, 1d; box 3 for excess golden parachute payments | 13a, 13b, 14 |
Understanding which form to file, and when, is essential for compliance and for avoiding IRS penalties. For the full guide to every 1099 form, including Form 1099-K, see 1099 confusion? Here's who gets what at 2026 year-end.
Form 1099-NEC (nonemployee compensation)
Form 1099-NEC reports payments of $2,000 or more to nonemployees for services performed in the course of your trade or business. The threshold was $600 before 2026 and may be adjusted for inflation beginning in 2027.
You file Form 1099-NEC if:
- The payment was made to someone who is not your employee
- The payment was for services performed for your business
- The payment was made to an individual, partnership, estate, or corporation (in limited cases)
- The total payment for the year was $2,000 or more
If you withheld federal income tax under the backup withholding rules, you file regardless of the amount.
What's reported where
- Box 1a: Total nonemployee compensation
- Boxes 1b, 1c, and 1d: Cash tips, Treasury Tipped Occupation Code, and qualified overtime compensation
- Box 3: Excess golden parachute payments, which are no longer reported on Form 1099-MISC. This applies mainly to executive-level transactions tied to a change in ownership or control.
- Box 4: Federal income tax withheld (backup withholding)
E-filing Form 1099-NEC
Businesses that file 10 or more information returns (W-2s, 1099s, and others combined) must file electronically. The IRS Information Returns Intake System (IRIS) lets you submit forms online, but it requires a Transmitter Control Code (TCC). Many businesses use an e-filing partner like Greenshades to handle that step.
(IRS Instructions for Forms 1099-MISC and 1099-NEC)
Form 1099-MISC (miscellaneous income)
Form 1099-MISC reports income not covered by Form 1099-NEC. You file it when you've paid a recipient:
- At least $10 in royalties
- At least $600 in gross proceeds to an attorney
- Any fishing boat proceeds
- At least $2,000 in rents, prizes and awards, other income, medical and health care payments, crop insurance proceeds, section 409A deferrals, or nonqualified deferred compensation
A payment subject to backup withholding also triggers the form regardless of the amount.
What changed on the 2026 form
Boxes 13a and 13b report cash tips and the Treasury Tipped Occupation Code, and box 14 reports qualified overtime compensation. Box 14 is no longer used for excess golden parachute payments, which now go on Form 1099-NEC, box 3.
(IRS Instructions for Forms 1099-MISC and 1099-NEC)
Which form fits which payment
- Contractor invoice for services: 1099-NEC, box 1a
- Attorney fees for legal services: 1099-NEC, box 1a
- Gross proceeds paid to an attorney, such as a settlement: 1099-MISC, box 10
- Rent paid to a landlord: 1099-MISC, box 1
- A prize or award not tied to services: 1099-MISC, box 3
- A contractor paid by credit card or payment app: neither, because the platform issues Form 1099-K
Stay ahead of every deadline
Your 2027 compliance calendar
A month-by-month guide with all key federal payroll and tax deadlines, holidays, and monthly tips.
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State filing requirements
Not all states require 1099 submissions, and some participate in the Combined Federal/State Filing (CF/SF) Program, which lets one federal filing cover participating states. Confirm your requirements with your state's tax agency.
FAQ
Do I file a 1099-NEC or a 1099-MISC for attorney payments?
Both, depending on the payment. Attorney fees for legal services go on Form 1099-NEC, box 1a, at $2,000 or more. Gross proceeds paid to an attorney, such as a settlement payment, go on Form 1099-MISC, box 10, at $600 or more.
Does the $2,000 threshold apply to every payment type?
No. It applies to nonemployee compensation and most Form 1099-MISC payment types. Royalties stay at $10, and attorney gross proceeds and fish purchases stay at $600.
Do I issue a 1099 to a contractor I pay by credit card?
No. Card and payment-app payments are reported by the payment settlement entity on Form 1099-K, not by you on Form 1099-NEC or 1099-MISC.
Filing 1099s with Greenshades
The 1099 process is straightforward with the right tools. With Greenshades Year-End Forms, you can:
- Reduce manual entry: generate 1099s from your existing accounting and payroll data
- Increase accuracy: built-in validation checks help prevent common errors and missing information
- Stay compliant: automatically align with the latest IRS rules, e-file thresholds, and deadlines
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.
