How to Avoid Getting a 1099 — Legitimate Strategies
Learn how to legally reduce or avoid receiving a 1099-NEC from your clients.
Understanding the $600 Threshold
The IRS requires a payer to issue a 1099-NEC if they pay you $600 or more in a tax year for services rendered. Below this threshold, a 1099 is not legally required — but you must still report the income on your tax return.
Legitimate Strategies to Reduce 1099s
1. Keep Individual Payments Below $600
Negotiate project rates so no single client pays you $600 or more in a tax year. This is common for freelancers working with multiple small clients.
2. Use Your Business Entity's EIN
If you operate as an LLC or corporation, having the company receive payments and file under its EIN shifts reporting away from personal 1099s.
3. Work Through a PEO or Payroll Provider
Professional Employer Organizations (PEOs) handle W-2 employment, eliminating the need for 1099s entirely if you qualify as an employee.
4. C Corporation Structure
Incorporating as a C Corp and receiving earnings as W-2 wages avoids 1099 issuance for those payments.
5. Retirement Accounts and Tax-Advantaged Vehicles
Contributing to a SEP-IRA or Solo 401(k) reduces taxable income without affecting 1099 reporting.
Important Warning
Failing to report income on your tax return — even without receiving a 1099 — is tax evasion and carries penalties up to 75% of the tax owed, plus interest.
Need help tracking your contractor income? Our free paystub generator and W-9 wizard help you stay organized.