Use Form 1099-NEC when you paid someone who is not your employee for work they did for your business.
Use Form 1099-MISC for business payments that are not for work: rent, royalties, prizes, medical payments and settlement money paid to a lawyer. If the payment bought a service, it is NEC; if it did not, check MISC.
Both forms report payments of $2,000 or more to one payee in a year, with a few lower exceptions covered below. The rules here are for payments made in 2026, reported in early 2027. Other 1099 types are covered in what is a 1099 form.
The one-question test: did the payment buy work?
The IRS instructions give four conditions for nonemployee compensation. The payee is not your employee, you paid for services in the course of your trade or business, the payee is an individual, partnership or estate (or, in some cases, a corporation), and the year’s total reached the threshold.
When all four hold, the payment goes in box 1a of Form 1099-NEC.
A bookkeeper, a freelance designer, a cleaning contractor and a consultant all fit. So does a plumber who bills you for a repair, including the parts on the same bill, because the IRS counts incidental materials as part of the service.
Everything else that has to be reported, but is not pay for work, lands on 1099-MISC. Office rent paid to the building owner goes in box 1. A royalty for licensing someone’s photo goes in box 2. A cash prize that is not for services goes in box 3.
Which form each common payment needs
The table covers the payments small businesses ask about most, with the box and the year’s total that triggers a form. Three rows have no form at all from you, which is often the real answer.
| Payment | Form and box | Report when the year's total is |
|---|---|---|
| Fees to a contractor for services (sole proprietor, partnership or LLC taxed as one) | 1099-NEC box 1a | $2,000 or more |
| Parts or materials billed with a service, when they are incidental to it | 1099-NEC box 1a, with the service | $2,000 or more in total |
| Attorney's fees for legal work, even to a law firm that is a corporation | 1099-NEC box 1a | $2,000 or more |
| Federal income tax backup-withheld from a contractor's fees | 1099-NEC box 4 | Any amount |
| Rent for an office, equipment or land, paid to the owner | 1099-MISC box 1 | $2,000 or more |
| Royalties, such as a license fee for a photo or song | 1099-MISC box 2 | $10 or more |
| A prize or award that is not for services | 1099-MISC box 3 | $2,000 or more |
| Medical or health care payments, even to a corporation | 1099-MISC box 6 | $2,000 or more |
| A settlement or other gross proceeds paid to an attorney | 1099-MISC box 10 | $600 or more |
| Consumer products sold to someone for resale | 1099-NEC box 2 or 1099-MISC box 7 | $5,000 or more |
| Anything paid by credit card, debit card or a payment app | Neither: the processor reports it on 1099-K | |
| Services from a C or S corporation (other than legal or medical) | Generally neither | |
| Rent paid to a property manager or real estate agent | Neither: the agent reports it to the owner | |
| Wages to your own employee | Form W-2, not a 1099 |
Two thresholds break the pattern. Royalties need a form from $10, and settlement money paid to a lawyer from $600. Selling $5,000 or more of consumer products to someone who resells them can go on either form; if you choose 1099-NEC for it, the January filing date applies.
A year of payments, sorted
Here is one invented business, a small landscape design studio in Spokane, and everyone it paid during the year. Seven payees produce only three forms.
| Payee | Paid by | 2026 total | Form | Why |
|---|---|---|---|---|
| Bookkeeper, sole proprietor | Bank transfer, monthly | $7,800 | 1099-NEC, box 1a | Services, $2,000 or more |
| Office landlord, an individual | Check, monthly | $22,200 | 1099-MISC, box 1 | Rent paid to the owner, $2,000 or more |
| Photographer, license to use photos | Check | $45 | 1099-MISC, box 2 | Royalties have a $10 threshold |
| Web developer, sole proprietor | Credit card | $2,400 | None from you | Paid by card, so the card processor reports it on Form 1099-K |
| IT support firm, an S corporation | Bank transfer | $3,600 | None | Payments to a corporation for services are generally not reported |
| Law firm, lease review | Check | $1,200 | None | Legal fees count even for a corporation, but this is under $2,000 |
| Customer raffle winner | Check | $500 | None | Prize under $2,000 |
Result: 1 Form 1099-NEC and 2 Forms 1099-MISC, out of seven payees.
The web developer still owes tax on the $2,400. You just are not the one reporting it: the card network sends Form 1099-K. Paying a contractor by check or bank transfer puts the reporting back on you, so the payment method matters as much as the payee.
The law firm row is the trap. Corporations are usually skipped, but legal fees are reported whatever the firm’s structure. This studio only escapes because the bill stayed under $2,000. A $2,500 bill from the same firm would need a 1099-NEC.
Lawyers can get either form
What you paid the lawyer for decides the form. Fees for legal work they did for your business go in box 1a of Form 1099-NEC.
Money that passes through the lawyer to someone else, such as a settlement you pay to a claimant through the claimant’s attorney, is gross proceeds and goes in box 10 of Form 1099-MISC.
The IRS treats a law firm or any other provider of legal services as an attorney here, and neither rule has the usual corporation exception. One payment can need both forms only if it really contains both kinds of money, so ask the firm for an invoice that separates its fee from the proceeds.
Deadlines: one date for NEC, three for MISC
Contractor pay moved off 1099-MISC onto its own form, 1099-NEC, starting with tax year 2020 (2020 instructions). The new form came with a single January date for the contractor’s copy and the IRS copy alike, while 1099-MISC kept its later IRS dates.
| Form | Copy to the recipient | IRS, on paper | IRS, e-filed |
|---|---|---|---|
| 1099-NEC | Mon, February 1, 2027 | Mon, February 1, 2027 | Mon, February 1, 2027 |
| 1099-MISC | Mon, February 1, 2027 (Tue, February 16, 2027 if box 8 or 10 is used) | Mon, March 1, 2027 | Wed, March 31, 2027 |
For 2026 forms, 1099-NEC is due to the contractor and the IRS on February 1, 2027, because January 31, 2027 is a Sunday.
Recipients of 1099-MISC get their copy by February 1, 2027, or February 16, 2027 when box 8 or 10 is filled in. The IRS copy is due March 1, 2027 on paper or March 31, 2027 electronically.
If you file 10 or more information returns of any type in a year, you must e-file them. The free IRS portal, IRIS, accepts both forms, and corrections too.
What if you used the wrong form?
Correct it. Filing the right form for the right amount fixes the IRS record, and the recipient gets a matching copy.
For a contractor, a 1099-MISC box 3 amount instead of a 1099-NEC box 1a amount can change how their tax software treats the income, because box 1a is self-employment income and box 3 usually is not.
From the recipient’s side, a wrong form does not change what they owe. Income from work you do as a business is self-employment income wherever the payer put it, taxed at 15.3% on top of income tax once net earnings pass $400.
Report it as business income and keep the invoices that show what the payments were for.
New boxes on the 2026 forms
Both forms gained boxes this year for the new tip and overtime deductions. On 1099-NEC, box 1b holds cash tips, 1c the tipped occupation code and 1d overtime compensation; on 1099-MISC, the same items sit in boxes 13a, 13b and 14.
The amounts are already inside box 1a or box 3, so they are not added again.
Most small businesses paying contractors leave the new boxes empty. They matter only if a nonemployee’s pay includes tips or overtime that the deduction rules cover.
Before you fill either form in
- Ask every new payee for a Form W-9 before the first payment, so you have their legal name, address and taxpayer ID.
- Total each payee’s year by how you paid them, and drop anything paid by card or payment app.
- Sort the rest: work goes to 1099-NEC, rent, royalties, prizes and lawyer proceeds to 1099-MISC.
- Skip payees under the threshold for their box, and corporations unless the payment was legal or medical.
- Give each payee their copy by the recipient date and file the IRS copy on time, on official red forms or through IRIS.
Our free 1099 generator makes the recipient copies, Copy B and Copy 2, for either form and switches between them without losing the payer details.
If you already know which form you need, go straight to the 1099-NEC generator or the 1099-MISC generator. Copy A for the IRS goes through IRIS or the official scannable form.
Not sure the person is a contractor at all? Settle that first, because an employee gets a W-2, not a 1099.
The comparison of W-2 and 1099 workers walks through the IRS control tests and the cost of getting it wrong. Contractors you pay regularly may also want an earnings statement for each payment as a record between forms.
Sources: Instructions for Forms 1099-MISC and 1099-NEC (12/2026); Form 1099-NEC and Form 1099-MISC (Rev. December 2026); General Instructions for Certain Information Returns; IRS, E-file information returns with IRIS; IRS, About Form W-9. Checked October 18, 2026.
