Form 1099 Preparation Guide for 2026 Payments: The New $2,000 Rule and How to File Right

If you pay contractors, landlords or other vendors, Form 1099 season starts long before January. For payments made in 2026, the rules changed in an important way: the One, Big, Beautiful Bill raised the reporting threshold for most 1099-NEC and 1099-MISC payments from $600 to $2,000. Fewer forms, yes, but also more room for mistakes if your vendor records aren't clean. This guide is adapted from the procedure we use with our own clients.

What changed for 2026: the new $2,000 1099 threshold

• $2,000 threshold. Nonemployee compensation (1099-NEC), rents, medical and health care payments, and other income (1099-MISC) are now reportable at $2,000 or more for tax years beginning after 2025. The amount may be adjusted for inflation starting in 2027.
• Some thresholds didn't move. Royalties are still reportable at $10, and gross proceeds paid to an attorney (for example, settlement funds) are still reportable at $600.
• Form 1099-K is back to $20,000. Payment apps and card processors report only when a payee has more than $20,000 in payments and more than 200 transactions.
• FIRE is retiring; IRIS takes over 1099 e-filing. The last day to file through the IRS FIRE system is Nov. 19, 2026. After Jan. 1, 2027, the IRS IRIS system is the only IRS electronic option for information returns, so plan for IRIS 1099 e-filing or use an approved provider such as QuickBooks.
• E-filing is mandatory at 10 returns. If you file 10 or more information returns in total (1099s and W-2s combined), you must e-file.

Who needs a 1099? The three-part test for every payee

Before you look at a dollar amount, run each vendor through three questions:

1. Tax classification. Individuals, sole proprietors, partnerships and single-member LLCs generally get a 1099. C and S corporations generally don't. The big exceptions are attorneys and medical providers, who get one even if incorporated. The vendor's Form W-9 tells you which box they checked.
2. Nature of the payment. Services, rent, prizes and other business income are reportable. Merchandise, freight, storage, telephone and similar items, accountable-plan reimbursements, and personal payments are not.
3. Calendar-year total, by payment method. Add up everything you paid the vendor from Jan. 1 to Dec. 31 across all accounts, but only count payments you made by check, ACH, wire, cash, Zelle or a personal peer-to-peer transfer.

Which payments count (and which don't)

PayPal, Venmo and the 1099-K threshold: the most common 1099 mistake

Card payments and "goods and services" payments through PayPal, Stripe, Square or a business Venmo or Cash App profile are reported by the processor on Form 1099-K, so you don't issue a 1099-NEC for those amounts. But personal transfers inside those same apps (PayPal Friends & Family, personal Venmo or Cash App, Apple Cash) and Zelle payments are still your responsibility to report. Never exclude a whole PayPal or Venmo account by default; look at how each payment was sent.

1099 filing deadlines for 2027 (for 2026 payments)

The usual Jan. 31, Feb. 15 and Feb. 28 dates fall on a weekend or holiday in 2027, so they roll to the next business day. Check your state's filing requirements too. Many states, including New Jersey, have their own rules.

How to prepare 1099s in QuickBooks Online, step by step

1. Reconcile everything through Dec. 31. Bank, cash and payment-app wallet accounts. Every transaction needs a real payee: record the actual vendor, not "Zelle" or "Venmo". Clear Uncategorized Expense.
2. Export the year's transactions. Run a transaction report for Jan. 1–Dec. 31 on bank, cash and P2P accounts only (leave out credit cards and processor accounts). Export to Excel (XLSX), not CSV, so the Split column survives.
3. Build a pivot table. Rows: vendor name, then expense account (Split). Values: sum of amount. Payments export as negatives, so a conditional-format rule of "less than -1,999.99" highlights everyone over the 2026 threshold.
4. Fix blank vendors. Drill into any unnamed amounts in accounts like Contract Labor, Legal & Professional, Repairs or Rent, assign the vendor in QuickBooks, and refresh.
5. Mark each payee Y / N / ? using the three-part test. Anything uncertain gets a "?" and a second look.
6. Confirm W-9s are on file for every "Y" payee, and request the missing ones in one consolidated list.
7. Update vendor records to match the W-9: legal name, address, tax ID, and the "Track payments for 1099" box. Then map each expense account to the right form and box.
8. Review, then e-file through QuickBooks' 1099 e-file service or IRIS. Reconcile 1099 totals back to your pivot, furnish recipient copies on time, and keep the confirmations and W-9s.

Year-round habits that make January easy

• The best way to collect W-9s: get one before the first payment to any new vendor. It must show legal name, address, tax classification, TIN, signature and date.
• Monthly: add new vendors, request W-9s, and make sure every transaction has a payee.
• Quarterly: review the vendor list for 1099-eligible payees and merge duplicate vendor records.
• Split mixed bills. Separate services from materials and reimbursements so only reportable amounts land on the 1099.
• If a vendor won't give you a TIN, backup withholding at 24% applies to future reportable payments.

What it costs to get it wrong

Penalties apply per form, and separately for failing to file with the IRS and failing to give the recipient their copy. For information returns due in 2026:

Amounts for returns due in 2027 are adjusted for inflation each year. A paper filing when e-filing was required counts as not filed.

Quick answers

What is the 1099 threshold for 2026?

For payments made in 2026, Forms 1099-NEC and 1099-MISC are generally required when you pay a vendor $2,000 or more during the year. Royalties ($10) and gross proceeds paid to attorneys ($600) keep their lower thresholds.

Do I send a 1099 to an LLC?

Usually yes, if the LLC is a single-member (disregarded) LLC or taxed as a partnership. If the LLC has elected to be taxed as a C or S corporation, generally no, unless it provides legal or medical services. Its Form W-9 shows the classification.

Do I issue a 1099 for payments made through PayPal or Venmo?

Not for goods-and-services or business-profile payments; the app reports those on Form 1099-K. Personal (Friends & Family) transfers and Zelle payments for business services are still yours to report if they reach the threshold.

When are 1099-NEC forms due in 2027?

Monday, Feb. 1, 2027, both to the contractor and to the IRS. There's no automatic extension for Form 1099-NEC.