Business owners are currently required to report payments to independent contractors (non-employees) for services greater than $600 each year. This dollar amount was set in 1954 and never adjusted for inflation – until now. Greetings, Lynn Spencer here. Today’s post is an overview of the major rule changes to 1099-NEC and 1099-K.

Beginning with payments made in 2026, fewer small business owners will trigger mandatory 1099 filings. The filing requirement will be a 1099-NEC to each independent contractor for payments that exceed $2,000 during the year. In 2027, this amount will be adjusted for inflation each year in $100 increments.

OBBBA also reverted the filing rules for 1099-K, which are used by third-party settlement organizations (TPSOs) such as PayPal, Uber, eBay and others. These platforms are responsible for 1099-Ks when payments meet certain requirements ($20,000 or 200 transactions). For example, business owners who pay contractors via PayPal or Uber, the party responsible for filing the 1099-K is the TPSO.

Late reporting penalties for the 2025 tax year are as follows:

  • Up to 30 days late – $60 per form
  • 31 days through Aug 1st – $130 per form
  • After Aug 1 – $330 per form
  • Intentional disregard – $660 (or more) with no cap!

1099 -Tips –

  1. Regardless of whether a 1099 form is issued, all taxpayers must report all taxable income on their tax returns – even if it is not reported to the IRS by a third party.
  2. Plan ahead for the 2026 change in NEC. If contractors receive small amounts (e.g. $600 to $1,900) keep in mind – for 2025, the reporting threshold is $600.
  3. Be aware of state rules. Some states may keep lower thresholds for state and local level tax reporting – (Georgia is not one of them)

Killingsworth Spencer is here to help our clients fully understand their options to save taxes today and in the future. We have CPAs, Enrolled Agents, Bookkeepers, and payroll specialists on staff to help our clients with accounting and tax-related matters. For more information or to schedule an appointment, please call us at 770-552-8286. Visit us at www.killingsworthspencerllc.com

Disclaimer: This post is for general information only and should not be taken as legal or financial advice.