Preparing for 2026 Information Returns (1099 Filing Season)

(Reporting payments made during calendar year 2025)

Dear Clients,

As we approach the 2026 information-return filing season (for payments made during 2025), we want to highlight current filing requirements, IRS-published deadlines, best practices, and important changes scheduled to take effect in future years.

Although there has been significant discussion around new reporting rules under the One Big Beautiful Bill Act (OBBBA), most information-return requirements for payments made in 2025 remain unchanged. Several meaningful changes will apply beginning with payments made in 2026, which are summarized near the end of this article.

Failure to properly file or furnish required information returns can result in penalties that add up quickly and remain a key IRS enforcement priority.

1099 Filing Deadlines – 2026 Filing Season (IRS-Adjusted Dates)

The IRS automatically adjusts deadlines that fall on a weekend or federal holiday to the next business day.

Penalties for Failure to File or Furnish (2026 Filing Season)

For information returns required to be filed in 2026, the IRS penalty structure is:

• $60 per form if corrected within 30 days
• $130 per form if corrected after 30 days but before August 1
• $340 per form if filed after August 1 or not filed at all
• $680 per form for intentional disregard, with no maximum

Separate penalties may apply for failure to furnish correct payee statements.

Who Needs to File Form 1099-NEC

File Form 1099-NEC (Nonemployee Compensation) for each person you paid $600 or more during 2025, in the course of your trade or business, for:

• Services performed by someone who is not your employee (including parts and materials)
• Payments to attorneys, even if the law firm is incorporated

Direct sales of consumer products totaling $5,000 or more for resale must be reported using:

• 1099-NEC, Box 2, or
• 1099-MISC, Box 7

If reported on 1099-NEC, the filing deadline remains February 2, 2026.

Who Needs to File Form 1099-MISC

File Form 1099-MISC if you paid at least:

• $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
• $600 for:
  • Rents
  • Prizes and awards
  • Other income
  • Medical and healthcare payments
  • Fishing boat proceeds
  • Crop insurance proceeds
  • Gross proceeds paid to attorneys
  • Section 409A deferrals or nonqualified deferred compensation

Form 1099-MISC is required for any amount subject to federal backup withholding.

Other Common Information Returns

• 1099-INT – Interest income paid to individuals or private lenders
• 1099-DIV – Dividends and corporate distributions
• 1099-R – Distributions from pensions, annuities, IRAs, and 401(k) plans

Key Basics and Best Practices

• Who must receive a 1099-NEC?
  Individuals, partnerships, LLCs, LPs, and estates paid more than $600 for services.
• Common exceptions:
  S- and C-corporations (except attorneys), payments for merchandise or freight, and rent paid through property managers (though landlords may still require reporting).
• Credit cards and payment apps:
  Payments made by credit card, debit card, PayPal, Venmo, Cash App, or similar platforms are excluded from 1099-NEC reporting. These may be reported by the payment processor on Form 1099-K.
• Attorneys remain a special case:
  Legal fees are generally reportable regardless of entity type.
• Collect W-9s early:
  Request Form W-9 before paying vendors you expect to pay $600 or more.
• State filing requirements:
  Many states require separate 1099 filings, particularly for 1099-NEC.
• Electronic filing requirement:
  If you file more than 10 total information returns in aggregate, you must e-file, unless an approved waiver is obtained.
• Foreign workers:
  Services performed inside the U.S. generally require a 1099-NEC. Services performed entirely outside the U.S. generally do not. Form W-8BEN should be used to document foreign status when applicable.

Form 1099-K (Payment Apps)

For payments made in 2025, federal Form 1099-K reporting applies only if both of the following thresholds are met:

• More than $20,000 in gross payments, and
• More than 200 transactions

Friends-and-family payments remain excluded.

Looking Ahead: Changes Beginning With 2026 Payments (Filed in 2027)

Several changes enacted under the One Big Beautiful Bill Act (OBBBA) apply beginning with payments made in 2026:

• Higher reporting thresholds
  The 1099-NEC and 1099-MISC reporting threshold increases from $600 to $2,000, indexed for inflation.
• Fewer required 1099 filings
  Many smaller vendor payments will no longer trigger reporting.
• Expected form revisions
  The IRS is expected to update W-2 and 1099 forms to support new compensation-related reporting.
• Additional IRS guidance anticipated
  Transition and penalty-relief guidance is expected during 2026.

Final Reminder

Information-return compliance remains a key IRS and state enforcement focus. Early preparation, proper documentation, and timely filing remain the best ways to avoid penalties.

If you have questions or would like assistance preparing and filing your 2026 information returns, please contact our office.