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 makes payments to individuals or organizations that aren’t employees—such as freelancers, independent contractors, or landlords—you’ll likely need to issue a Form 1099.
For years, Form 1099-MISC served as the catch-all form for reporting a variety of payments, including non-employee compensation. However, as the gig economy expanded and the number of independent workers increased, the IRS reintroduced Form 1099-NEC in 2020 to simplify things.
Now, the difference between the two is clear:
Understanding which form to file—and when—is essential for compliance and avoiding IRS penalties.
Form 1099-NEC is specifically used to report payments of $600 or more to non-employees for services performed in the course of your trade or business.
You must file Form 1099-NEC if:
Form 1099-NEC has one main box (Box 1) for reporting non-employee compensation. You’ll enter the total paid to the recipient, along with their name, address, and taxpayer identification number (TIN).
Electronic filing is now the standard. As of the 2024 tax year (filing in 2025), businesses that file 10 or more information returns (W-2s, 1099s, etc. combined) must file electronically.
The IRS Information Returns Intake System (IRIS) allows businesses to submit forms directly online—but it requires a Transmitter Control Code (TCC). Many businesses choose a trusted e-filing partner like Greenshades to simplify this process and stay compliant with evolving IRS rules.
Form 1099-MISC is used to report various types of other income not covered by 1099-NEC. This includes items like rent payments, royalties, prizes, or legal settlements.
You must file Form 1099-MISC for payments of $600 or more made for:
Royalties are an exception—only $10 or more in payments triggers a 1099-MISC filing.
Form 1099-MISC includes multiple boxes for different income types. Ensure the correct amounts are reported in the appropriate box, and that all recipient information is accurate before filing.
To stay compliant, businesses must complete and submit each 1099 form by the appropriate deadline:
Not all states require 1099 submissions, and some participate in the Combined Federal/State Filing (CF/SF) Program, which allows one filing to cover both federal and state requirements. Always confirm with your state’s tax agency or a trusted advisor.
The IRS April 2025 revisions to Forms 1099-NEC and 1099-MISC include a key change in reporting Excess Golden Parachute Payments:
Additionally, beginning in tax year 2026, the reporting threshold for these payments increases to $2,000.
While this update applies mainly to executive-level or corporate transactions, it’s important to stay aware of the change for accurate future filings.
The 1099 process can be straightforward when you utilize the appropriate tools. With Greenshades, you can simplify 1099 e-filing from start to finish:
Learn how Greenshades can streamline your year-end filing process.