A client just asked for your W-9 and mentioned something about sending you a 1099 in January. Or maybe you paid a freelance designer last year and someone told you that you might owe them a form. Either way, you are now asking the question that confuses millions of self-employed professionals and small business owners every tax season: who actually gets a 1099?
Who Gets a 1099? The Short Answer
A 1099 form goes to any non-employee you paid $600 or more in a tax year for services connected to your trade or business. That includes independent contractors, freelancers, consultants, and other self-employed workers who provide services but are not on your payroll. It also covers certain rent payments, prize winnings, legal settlements, and specific financial transactions, each reported on a different variant of the 1099 form.
The form is how the IRS tracks income that does not show up on a W-2. As a result, both the payer and the recipient have reporting obligations, and missing the deadline can trigger penalties on either side.
Why This Matters for Self-Employed Professionals
Knowing who gets a 1099 matters for two reasons. For the self-employed recipient, the form creates a paper trail the IRS uses to match reported income against actual earnings. If a client issues you one and you forget to report that income, the mismatch frequently triggers a notice or an audit. On the other hand, if you hire help for your own solo business, failing to send a 1099 when required can cost you the deduction for that expense and can add penalties that currently range from $60 to $330 per form, depending on how late the filing is.
Most independent workers encounter 1099s for the first time in their first or second year of self-employment. Therefore, treating the form as routine paperwork, rather than a last-minute tax-season scramble, is one of the clearest signals that a solo business is maturing.
Which People and Businesses Actually Get a 1099?
The most common version for service-based work is the 1099-NEC, which stands for Nonemployee Compensation. You must issue one to any of the following, assuming total payments reached $600 or more during the calendar year.
Independent Contractors and Freelancers
Any non-employee you hired for work connected to your business falls in this bucket. For instance, this includes freelance writers, designers, developers, virtual assistants, bookkeepers, consultants, coaches, photographers, and videographers. In addition, trade workers like electricians or plumbers who service your home office count if the work was for your business, not your personal residence.
Sole Proprietors and Single-Member LLCs
These are taxed as sole proprietors by default, so payments to them trigger a 1099 in the same way payments to an individual freelancer would. For example, if you paid a solo copywriter who operates as a single-member LLC, you still issue the form. Specifically, the W-9 the contractor completes will show “disregarded entity” or an individual’s SSN, which indicates that a 1099 is required.
Partnerships
Payments to partnerships for services also require a 1099-NEC if the amount exceeds the $600 threshold. Therefore, two-person or multi-member LLCs taxed as partnerships fall into this rule. The W-9 will indicate partnership status.
Attorneys (Always, Regardless of Entity Type)
Payments of $600 or more to attorneys require a 1099, even if the law firm is a corporation. This is a specific IRS carve-out. For legal settlement proceeds paid to a claimant’s attorney, you use Form 1099-MISC, Box 10. For legal services you received directly, you use Form 1099-NEC.
Who Does NOT Get a 1099?
Several categories of payees are exempt from 1099 reporting, which trips up many first-time filers.
Corporations (C-Corps and S-Corps)
Generally, you do not need to send a 1099 to a business that is taxed as a corporation. For instance, if the contractor’s W-9 indicates C-Corp or S-Corp, you can usually skip the form. However, the attorney exception above always applies. Furthermore, medical and health care payments to corporations still require reporting on 1099-MISC.
Employees
Workers on your payroll receive a W-2, not a 1099. Moreover, classifying an employee as an independent contractor to avoid payroll taxes is one of the most common and expensive mistakes self-employed business owners make when they start hiring. The IRS and state agencies actively audit for misclassification.
Payments Made via Credit Card, Debit Card, or Third-Party Networks
If you paid a contractor through Stripe, PayPal, Venmo business accounts, Square, or a credit card, you do not issue them a 1099-NEC. Instead, the payment processor handles it through Form 1099-K. In other words, this prevents double reporting. However, payments made by cash, check, ACH bank transfer, or Zelle still require you to issue a 1099 to the recipient.
Payments for Personal, Not Business, Services
If you paid a dog walker or house cleaner out of personal funds for personal purposes, you do not owe a 1099. The rule applies only to payments made in the course of a trade or business.
What Are the Different 1099 Forms?
The IRS uses more than 20 variants of Form 1099. Most self-employed professionals will see only a handful. Here is a quick reference of the most common ones.
| Form | What It Reports | Common Scenario |
|---|---|---|
| 1099-NEC | Nonemployee compensation $600+ | You paid a freelancer for services |
| 1099-MISC | Rent, prizes, medical payments, and legal settlements | You paid rent to a landlord for an office |
| 1099-K | Payment card and third-party network transactions | Stripe or PayPal sent you one for client payments |
| 1099-INT | Interest income $10+ | Your bank paid you interest on a savings account |
| 1099-DIV | Dividends and distributions | You received brokerage dividends |
| 1099-R | Retirement account distributions | You took money out of an IRA or 401(k) |
| 1099-G | Government payments | You received unemployment or a state tax refund |
| 1099-C | Canceled debt $600+ | A credit card company forgave a balance |
What If You Are on the Receiving End?
If you are a freelancer or solo business owner, you do not “get a 1099” automatically. Rather, you get one from every client that paid you $600 or more via bank transfer or check, plus a 1099-K from any payment platform that hit the reporting threshold. In 2026, the 1099-K threshold is $2,500, and it will transition to $600 in 2027 under current IRS guidance. Therefore, verify the current threshold when you file.
Designer Jessica Hische, writing in her 2019 blog post about starting a freelance business, explained that she did not receive 1099s from every client in her first year and assumed that income did not need to be reported. Her accountant corrected her: all self-employment income must be reported on your Schedule C, whether or not a 1099 arrives. This proved expensive for Hische because she had to amend her returns. This principle applies across all types of self-employment, but execution depends on your bookkeeping system. For instance, freelancers who track income in real time rarely run into this problem.
What to Do If a 1099 Does Not Arrive
If you expected a 1099 and it did not come by early February, first check your spam folder and contact the client. Clients must issue the form by January 31 each year. However, even if the client never sends one, you still owe tax on the income. Therefore, report it on your Schedule C using your own records.
What to Do If a 1099 Is Incorrect
If the amount on a 1099 is wrong, request a corrected form from the issuer immediately. Do not ignore the discrepancy. For instance, if the IRS sees $50,000 reported and you claim $30,000, you will almost certainly receive a notice. Consequently, correcting an incorrect 1099 early is far easier than responding to a CP2000 matching notice months later.
How Do You Actually Issue a 1099 to a Contractor?
If you are the payer, the process is straightforward but time-sensitive.
First, collect a W-9 from every contractor before you pay them the first dollar. This protects you because the W-9 captures their legal name, address, taxpayer identification number, and entity type. Without it, you cannot issue a compliant form at year’s end.
Next, track total payments to each contractor throughout the year in your accounting software or a simple spreadsheet. Then, in January, generate 1099-NEC forms for every eligible contractor. Most self-employed business owners use QuickBooks, Xero, Gusto, or a dedicated 1099 service such as Track1099 or Tax1099 to handle electronic filing. Finally, deliver the form to the contractor by January 31 and file copies with the IRS by the same date.
As CPA Amy Northard explained on her blog for creative entrepreneurs, the cost of using a 1099 filing service is typically under $5 per form and saves hours of manual paperwork. This worked for her clients because most freelance businesses pay fewer than 20 contractors per year. For self-employed professionals with higher contractor volume, payroll platforms that integrate 1099 filing often make more sense.
What Happens If You Miss the Deadline?
Late-filing penalties currently range from $60 per form if filed within 30 days to $330 per form for filings more than six months late. Additionally, intentional disregard of the filing requirement can result in penalties of $660 or more per form, with no maximum. Therefore, even a handful of contractors can lead to several thousand dollars in penalties. Consequently, setting a January 15 internal deadline, rather than waiting until January 31, gives you a buffer for missing W-9s or data corrections.
Do This Week
- Pull a list of every non-employee you paid $600 or more last year
- Request W-9 forms from any contractor who has not submitted one
- Check which payments went via credit card or third-party network
- Confirm entity type for each contractor (sole prop, LLC, corporation)
- Choose a filing service like Track1099 or Tax1099 if you have more than three contractors
- Mark January 31 on your calendar as the combined recipient and IRS deadline
- Set a personal internal deadline of January 15 for generating forms
- Reconcile your contractor payment totals with your accounting software
- Review attorney payments separately because they always require a 1099
- Save copies of every issued 1099 with your tax records for at least three years
Final Thoughts
The 1099 system can feel complicated because it has dozens of variants and several exceptions, but the core rule is simple: non-employees paid $600 or more for business services almost always receive a 1099-NEC, and the form must be filed by January 31. If you are just beginning to hire other freelancers, build the W-9 collection habit into your onboarding from day one. In addition, if you are on the receiving end, track every dollar of self-employment income in real time so a missing or incorrect 1099 never becomes your problem.
Photo by Glenn Carstens-Peters: Unsplash
