Form 1099-NEC Guide 2026: Nonemployee Compensation PDF & Rules
Complete overview of IRS Form 1099-NEC for accounts payable, small businesses, and freelancers. Learn about the $600 threshold, W-9 verification, and penalties.
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What Is IRS Form 1099-NEC?
Form 1099-NEC (Nonemployee Compensation) is the specific IRS information tax return used by businesses to report nonemployee compensation paid to independent contractors, freelancers, sole proprietors, and LLCs.
The $600 IRS W-9 Threshold Rule
Under Internal Revenue Code rules, any trade or business that pays a non-incorporated contractor $600 or more during the calendar year must issue Form 1099-NEC to the payee and submit Copy A to the IRS. Read our full $600 W-9 Threshold Guide.
Who Receives a Form 1099-NEC?
| Entity Type | Requires 1099-NEC? | W-9 Required? |
|---|---|---|
| Sole Proprietors / Individuals | Yes (if ≥ $600) | Yes |
| Single-Member LLCs | Yes (if ≥ $600) | Yes |
| Partnerships | Yes (if ≥ $600) | Yes |
| C-Corporations & S-Corporations | Exempt (general rule) | Yes (to verify corp status) |
| Attorneys & Law Firms | Yes (always required, even if corp) | Yes |
What Happens If a Contractor Refuses to Supply a W-9?
If a contractor fails or refuses to provide a valid TIN on Form W-9, the payer is mandated by law to deduct 24% backup withholding from all compensation payments and remit it directly to the IRS.