If your business pays independent contractors, freelancers, or other service providers, there's an important change to the federal 1099 reporting rules for 2026.

The IRS has increased the reporting threshold for many qualifying payments from $600 to $2,000.

Beginning with payments made during 2026, businesses generally must issue Form 1099-NEC to qualifying independent contractors who receive $2,000 or more during the calendar year.

For example, if your business paid an independent contractor $1,500 for services during 2026, you generally would not be required to issue a 1099-NEC solely for those payments under the new threshold.

However, if that contractor received $2,500 in qualifying payments, a 1099-NEC would generally be required.

What Hasn't Changed?

Even though the reporting threshold has increased, businesses still need to maintain accurate records of payments made to contractors.

It's also important to remember:

• W-9 forms are still important. Obtain a completed W-9 before paying a new contractor whenever possible.

• Payment methods matter. Payments made by credit card or certain third-party payment networks are generally handled under different reporting rules.

• Not every payment follows the $2,000 threshold. Certain payments and reporting categories have different requirements.

• Contractor classification still matters. Paying someone as an independent contractor does not automatically mean they qualify for that classification.

What Should Business Owners Do Now?

Review your vendor list and confirm that you have current W-9 forms for contractors who may require reporting.

January is a busy month for payroll and tax reporting. Getting this information organized now can help avoid last-minute requests and filing delays.

Need help determining which vendors require a 1099? Contact Tzinberg & Associates before year-end so we can help you review your reporting requirements.

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Under U.S. Treasury regulations, any tax advice in this communication is not intended or written to be used to avoid IRS penalties. Tzinberg & Associates provides this information for general guidance only. It does not constitute tax advice, accounting services, investment advice, or professional consulting. Consult a professional adviser before making decisions or taking action, as the information is provided "as is" without any warranties regarding its completeness, accuracy, or timeliness.