Miss the January 31 deadline and the penalty starts at $60 a form and climbs from there. Most of the pain of filing a 1099 isn't the filing, it's realizing in late January that you never collected the paperwork you needed back in June. So the order matters as much as the steps.
Here's how to file a 1099-NEC for a contractor, in the order that keeps January quiet.
Step 0: Do you even need to send one?
Not every contractor payment triggers a 1099. Send a 1099-NEC when all of these are true:
- You paid them for services in the course of your business, not personal spending.
- The total for the year crossed the reporting threshold. That's $600 for 2025 payments; the One Big Beautiful Bill raised it to $2,000 starting with 2026 payments.
- You paid by cash, check, or bank transfer (ACH).
And skip the 1099 when:
- You paid by credit card or a third-party payment network. The processor reports those on a 1099-K, so if you send a 1099-NEC for the same money, the contractor's income gets counted twice. This is the trap most people miss. Pay a contractor $10,000 by card and you issue nothing; the card network handles it.
- The contractor is a corporation (C-corp or S-corp), which is exempt by default. The exception: attorneys and medical or healthcare payments always get a 1099, even to a corporation.
- You paid under the threshold for the year.
If you're unsure which form a given payee gets, the full decision tree is in 1099-NEC vs 1099-MISC. Most small businesses only ever issue 1099-NECs.
Step 1: Get the W-9 first (this is the whole game)
Before you cut the first check to a new contractor, get a signed Form W-9 from them. It's a one-page form they fill out, and it hands you everything the 1099 needs: legal name, address, tax classification (that's how you know whether they're a corporation and therefore exempt), and their taxpayer ID number.
Collecting it up front, not in January, is the single habit that makes 1099 season painless. A contractor who's already been paid and moved on has no reason to answer your emails. One who's waiting on their first check will send it back the same day.
If a contractor refuses to provide a W-9, you're required to withhold 24% of their pay as backup withholding and remit it to the IRS. That's reason enough for them to cooperate.
Step 2: Total up what you paid on the reportable rails
Add up everything you paid that contractor by cash, check, and ACH for the year. Leave out anything you paid by card or payment app, since that's on the processor's 1099-K. This is exactly the number your books should already have if you've been keeping them, which is one more argument for the year-round bookkeeping minimum instead of a January reconstruction. If the contractor's total is contract labor for your business, it's also a deduction on your own return; see the contract-labor line in the Schedule C deductions checklist.
Step 3: File by January 31
The 1099-NEC has one early deadline that covers everything: the contractor's copy and the IRS copy are both due January 31. Two pieces:
- Copy B goes to the contractor. By mail, or electronically if they agreed to that in advance. Emailing a PDF without their prior consent doesn't count as delivered.
- Copy A goes to the IRS. On paper or by e-file.
Paper is only an option for the smallest filers. Since 2024, if you're filing 10 or more information returns total (all your 1099s and W-2s combined), the IRS requires you to e-file. Approved e-file routes include the IRS IRIS portal (free, manual entry), the older FIRE system, and third-party filing software that transmits for you. However you file, save the confirmation.
Step 4: Don't forget the state copy
Most states want their own copy of the 1099. Some pull it automatically through the Combined Federal/State Filing program when you e-file federally; others require a separate state submission. Check your state before you assume the federal filing covered it.
Where ExpenseGhost fits
The 1099 scramble is really a records problem, so ExpenseGhost handles it as one. It watches your bank feed all year and surfaces every contractor you've paid past the threshold on reportable rails, with the card and payment-app spend already set aside so you don't double-report. You collect each contractor's W-9 inside the app and track whose you still owe, so nobody's paperwork is missing in January.
Before a number goes out, ExpenseGhost runs an instant TIN match against IRS records, so a typo in a taxpayer ID gets caught now instead of turning into a CP2100 notice and backup withholding later. E-filing the 1099-NEC itself is rolling out in a controlled beta at $4.99 a form. W-9 collection, TIN matching, and prep are available today.
None of this is tax filing on your behalf; the forms and totals are drafts for you to review and file. What it removes is the archaeology. See the pricing page for what's included.
FAQ
Do I need to send a 1099 to every contractor I paid?
No. You send a 1099-NEC only for contractors you paid by cash, check, or bank transfer above the yearly threshold ($600 for 2025, $2,000 for 2026 payments) for business services. You skip anyone you paid by credit card or payment app, since the processor reports that on a 1099-K, and you skip most corporations, with attorneys and medical payments as the exceptions.
What if I never got a W-9 from the contractor?
Request it now. You need their legal name, address, and taxpayer ID to file, and those live on the W-9. If they won't provide one, you're required to withhold 24% of their payments as backup withholding. The lesson for next time is to collect the W-9 before the first payment, while you still have leverage.
What happens if I file a 1099 late?
The penalty scales with how late you are: it starts around $60 per form within 30 days, rises to roughly $130 through the summer, and reaches $330 or more after that, with a higher penalty for intentional disregard. Filing late is still far cheaper than not filing, and the penalty is smaller the sooner you catch it, so file as soon as you realize you missed one.
Can I file a 1099-NEC on paper?
Only if you're filing fewer than 10 information returns total for the year, counting all your 1099s and W-2s together. At 10 or more, the IRS requires e-filing. Even under 10, e-filing is faster and gives you a confirmation to keep, so most small businesses e-file regardless.
ExpenseGhost provides tax estimates and tax-ready exports. We are not a tax preparer and do not file returns. Estimates are informational — verify every number with a licensed tax professional before filing.