Who Needs a 1099 From You This Year? The $2,000 Rule, and a Tracker That Answers It

If you paid anyone who isn't on payroll this year, you have a January problem coming, and the rules just changed. For 2026 payments, the 1099 reporting threshold is $2,000 per vendor, up from the $600 figure that had been in place for decades. That means fewer forms. The deadline stays the same: Monday, February 1, 2027. And any vendor you still owe a form needs a W-9 on file before you can file it.

This post walks through the rule as it stands for 2026. It also gives you a Google Sheet that takes your vendor list from QuickBooks and tells you, row by row, who gets a form and what you still need from them.

What changed

The One Big Beautiful Bill Act raised the threshold for Form 1099-NEC and most boxes of Form 1099-MISC from $600 to $2,000, effective for payments made after December 31, 2025. Starting in 2027, the threshold is adjusted for inflation each year, rounded to the nearest $100.

Three things did not change:

• Gross proceeds paid to attorneys stay at $600. These are things like settlements, reported in 1099-MISC box 10. That rule sits in a different section of the Code, which the new law didn't touch: IRC §6045(f) and Treas. Reg. §1.6045-5. The threshold OBBBA §70433 raised is the one in §6041(a).
• Royalties stay at $10 under §6050N.
• The rules on who is exempt, who isn't, and what counts as a payment are exactly where they were.

One distinction trips people up. Attorney fees for legal work you hired a lawyer to do are ordinary nonemployee compensation under §6041(a), so they follow the new $2,000 threshold on 1099-NEC. Attorney gross proceeds, such as a settlement check that passes through a lawyer's trust account, stay at $600 on 1099-MISC under §6045(f). §6045(f) excludes anything §6041(a) already covers, which is why the two don't overlap. The IRS instructions for Forms 1099-MISC and 1099-NEC explain both.

The five questions that decide every vendor

Run each vendor through these questions in order. The sheet does it for you, but you should know why it answers the way it does.

1. Did you pay them by card or through a payment app like PayPal or Stripe?

If yes, stop. The card company or payment app reports that money on a 1099-K, and you don't file anything. Only cash, check, ACH, wire and direct bank transfers count toward your 1099. That includes Zelle, which is a bank-to-bank transfer, not a payment app that issues 1099-Ks. Filing 1099s for card payments is one of the most common over-filing mistakes in small-business books.

2. Was it for goods or for services?

Inventory, equipment and merchandise are not reportable. Services, rent, legal work, medical payments and royalties are.

3. Are they a corporation?

C corporations and S corporations are exempt from most 1099 reporting. So is an LLC that has elected to be taxed as either one, and its W-9 will tell you. A single-member LLC or a partnership LLC is not exempt. There are two exceptions to the corporate exemption: attorneys and health-care providers get a form even when they're incorporated. The same rule applies to rent: rent paid to a corporation is exempt, while rent paid to an individual or an LLC that isn't taxed as a corporation is not.

4. Did the total hit the threshold?

For the standard categories, the test is $2,000 or more, added up across the whole year. A vendor at $1,999 gets nothing. A vendor at $2,000 gets a form.

5. Do you have their W-9?

If a form is required and you don't have a W-9 with a valid taxpayer ID, you can't file a correct return. A vendor who doesn't give you a taxpayer ID is also subject to backup withholding, which means you hold back 24% of reportable payments and send it to the IRS. Ask for the W-9 now, in October, while you still have payments going to them. That gives you leverage. In January you have none.

Which form, which box

Most of what a small business pays goes on 1099-NEC box 1: contractors, freelancers, consultants, and attorney fees for legal services.

1099-MISC covers:

• Rent (box 1)
• Royalties (box 2)
• Prizes and other income (box 3)
• Medical and health-care payments (box 6)
• Gross proceeds to attorneys (box 10)

The sheet assigns the form and box from the payment type you pick.

Deadlines and filing

If you file 10 or more information returns of any kind combined, you must e-file. That count includes W-2s and every type of 1099.

Texas has no state income tax, so there's no separate state 1099 filing for Texas businesses. The federal filing is the whole job.

The IRS's free IRIS portal is the way to e-file. The old FIRE system takes its last filings on November 19, 2026. From January 1, 2027, IRIS is the only IRS e-filing system for information returns. If you've filed through FIRE before, you'll need to switch to IRIS this year. QuickBooks Online will also e-file 1099s straight from your vendor records, which is the easiest route if your books are clean.

Penalties are charged per form and go up the later you file. For returns due in 2026, the IRS amounts are:

• $60 if filed within 30 days of the deadline
• $130 if filed after that but by August 1
• $340 if filed after August 1
• $680 for intentional disregard

The IRS adjusts these amounts for inflation each year. The 2027 figures hadn't been published when this was written.

The tracker

The 1099 Prep Tracker is a Google Sheet with four working tabs. Here's how it works:

1. Paste in your vendor list from QuickBooks. Run Reports → Expenses by Vendor Summary, dated January 1 through December 31, 2026.
2. Fill in the six yellow columns for each vendor. The sheet returns the form required, the box, and the action you need to take.
3. Check the Output tab. It totals your forms, tells you whether you have to e-file, and lists what's still missing.

The thresholds live on a Settings tab, so you can update them if the IRS changes them.

The sheet comes with ten example vendors that cover every branch of the logic. They include the $1,999 vs. $2,000 edge case, the incorporated law firm, and the cleaning company you paid by card. Delete them once you've seen how the sheet behaves.

What to do this week

1. Pull the vendor report and drop it into the tracker.
2. Send a W-9 request to every vendor marked "Get W-9" before your next payment to them goes out.

That one step turns January from a scramble into a filing session.

If your books aren't clean enough to trust the vendor report, fix that first. That's most of what I do for clients in Q4, as part of year-end close and tax prep.

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