# Do I Need to Send a 1099 to a Subcontractor?

Yes, if you paid an unincorporated subcontractor for work in the course of your business and the total for the year reached the IRS threshold. For payments made in 2026, file Form 1099-NEC when you paid a sub $2,000 or more; for 2025 payments the threshold was $600. Payments to most corporations are exempt.

## Key takeaways

- Form 1099-NEC reports nonemployee compensation: what you paid a subcontractor who isn't your employee.
- For payments made after December 31, 2025, the threshold is $2,000 per sub per year (it was $600). The IRS may adjust it for inflation starting in 2027.
- Payments to C and S corporations, including LLCs taxed as corporations, are generally exempt. Sole proprietors, partnerships and single-member LLCs are not.
- Send the recipient copy and file with the IRS by January 31, moved to the next business day on a weekend. For 2026 payments that's February 1, 2027.
- Get a signed Form W-9 before the first payment. If a sub won't give you a taxpayer ID, the IRS requires 24% backup withholding.

## What is a 1099-NEC?

Form 1099-NEC is the IRS information return a business uses to report **nonemployee compensation**: payments for services to someone who isn't on your payroll. For a contractor, that's mostly subcontractors: the drywall hanger, the tile setter, the sub who runs your low-voltage wiring. You send one copy to the sub and one to the IRS, so the income you deducted as a cost shows up on their return.

The IRS instructions say to report only payments made **in the course of your trade or business**. Personal payments aren't reportable, so a homeowner who hires you to redo a bathroom doesn't send you a 1099. But when your company hires a sub for that bathroom, you do, if the threshold is met.

## What is the 1099 threshold for 2026?

For payments made after December 31, 2025, you file Form 1099-NEC when you paid a subcontractor **$2,000 or more** during the calendar year. The old $600 threshold applies to payments made in 2025 and earlier. The change comes from the 2025 tax law the IRS now calls the Working Families Tax Cuts (the One Big Beautiful Bill Act), and the IRS says the $2,000 figure may be adjusted for inflation beginning in 2027.

**Form 1099-NEC reporting threshold by payment year**

| Payments made in | Form filed in | Threshold per sub | Due to sub and IRS |
| --- | --- | --- | --- |
| 2025 | Early 2026 | $600 or more | February 2, 2026 (January 31 fell on a Saturday) |
| 2026 | Early 2027 | $2,000 or more | February 1, 2027 (January 31 falls on a Sunday) |
| 2027 and later | Following year | $2,000, possibly inflation-adjusted | January 31 or the next business day |

_Sources: IRS Form 1099-NEC FAQ and Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026), checked 2026-10-12. Due dates follow the IRS rule that a deadline on a weekend or legal holiday moves to the next business day._

> **Under the threshold is still taxable income**
>
> The threshold only decides whether *you* file a form. A sub you paid $1,500 still owes tax on that money, and you still need records showing what you paid and why.

## Who gets a 1099-NEC and who doesn't?

The rule of thumb: unincorporated businesses get one, corporations generally don't. Ask for a [W-9](https://www.brix.so/learn/w9-for-subcontractors) before you pay anyone, because the box they check on it tells you which bucket they're in.

**Who you send a 1099-NEC to (when you paid them $2,000+ in 2026 for services)**

| Who you paid | 1099-NEC? | Why |
| --- | --- | --- |
| Sole proprietor sub ("Mike's Drywall") | Yes | An individual paid for services |
| Single-member LLC taxed as a sole proprietorship | Yes | Treated as the owner for income tax |
| Partnership or multi-member LLC taxed as a partnership | Yes | Partnerships are named in the IRS definition of nonemployee compensation |
| C corporation or S corporation | Generally no | Payments to corporations are generally exempt |
| LLC that elected to be taxed as a C or S corp | Generally no | Treated like a corporation for this exemption |
| Attorney or law firm, even incorporated | Yes | The corporate exemption doesn't apply to legal services |
| Your W-2 employees | No | Wages go on Form W-2 |
| Supplier you bought materials from | No | Payments for merchandise and similar items aren't reportable |
| Anyone you paid by credit or debit card | No | Card payments are reported by the processor on Form 1099-K |

_Source: IRS Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026). Edge cases exist; check with a CPA or enrolled agent._

### Do materials count toward the 1099 amount?

Yes, when the sub supplied them as part of the service. The IRS lists "payment for services, including payment for parts or materials used to perform the services" as reportable. If your roofing sub billed you $1,400 for labor and $900 for flashing and underlayment on the same job, the reportable amount is $2,300. Materials you buy yourself from a supply house are a different payment and aren't reported on a 1099.

## How the 1099 rules work on a real job

> **Example: a remodeling contractor's 2026 subs (illustrative)**
>
> A two-truck remodeling company paid these subs in 2026:
>
> **Drywall sub, sole proprietor: $14,500 by check.** 1099-NEC required. The full $14,500 goes in box 1.
>
> **Electrician, operates as an S corporation: $8,000 by ACH.** Generally no 1099, because payments to corporations are exempt. Keep the W-9 that shows the S corp box checked.
>
> **Painter, sole proprietor: $1,800 by check.** No 1099 for 2026, because it's under $2,000. Under the 2025 rule ($600), the same payment would have needed one.
>
> **Plumbing sub, single-member LLC: $3,000 paid with the company credit card.** No 1099-NEC from you. The card processor reports it on Form 1099-K.

## How do you file a 1099-NEC?

1. **Collect a W-9 before the first payment.** Get the sub's legal name, business name, tax classification and taxpayer identification number (TIN). See [how to collect a W-9 from a subcontractor](https://www.brix.so/learn/w9-for-subcontractors).
2. **Track payments by sub all year.** Tag every payment to a sub in your books, and note how you paid (check, ACH, card). Card payments drop out of the 1099-NEC total.
3. **In January, total each sub's payments.** Anyone at $2,000 or more for 2026 (and not exempt) gets a 1099-NEC. Box 1 is the total nonemployee compensation.
4. **File with the IRS and send the sub's copy by the deadline.** Both are due January 31 (February 1, 2027 for 2026 payments). If you file 10 or more information returns of any type in a year, counting W-2s, the IRS requires you to e-file. The IRS's free IRIS portal handles 1099-NEC.
5. **Check your state.** Many states want a copy of 1099-NEC data, some through the federal/state program and some directly. See your state's [tax guide](https://www.brix.so/taxes).

## What happens if a sub won't give you a W-9?

You have to start **backup withholding**: hold back 24% of reportable payments and send it to the IRS. That also applies when the IRS tells you a sub's TIN is wrong. If you don't withhold when you're required to, the IRS can hold you liable for the amount you should have withheld. In practice, most contractors simply won't release the first check until the W-9 is in hand.

## Is a 1099 sub really a subcontractor?

Sending a 1099 doesn't make someone a contractor. The IRS looks at behavioral control, financial control and the relationship of the parties. A "sub" who works only for you, on your schedule, with your tools and your supervision, may legally be an employee, which means payroll taxes and a W-2 instead. Read [W-2 vs. 1099](https://www.brix.so/learn/w2-vs-1099) before you put a helper on 1099s, and run the numbers with the [1099 vs. W-2 cost calculator](https://www.brix.so/tools/1099-vs-w2-calculator).

## Common 1099 mistakes contractors make

- **Using last year's threshold.** For 2026 payments the line is $2,000, not $600. For 2025 payments it was $600.
- **Leaving out materials the sub supplied.** Parts and materials used to perform the service count toward the total.
- **Sending a 1099 for card payments.** Those are reported on Form 1099-K by the processor, so reporting them on a 1099-NEC double-counts the income.
- **Skipping LLCs.** An LLC is only exempt if it's taxed as a corporation. Single-member and partnership LLCs still get a 1099.
- **Chasing W-9s in January.** Subs are harder to reach once the job is paid. Collect it before the first check.
- **Treating a full-time helper as a sub.** That's a worker classification problem, not a paperwork problem.

> **When to bring in a CPA or enrolled agent**
>
> Get a professional when a sub refuses a W-9, when you're unsure whether someone is an employee, when you missed prior-year 1099s, or when you got an IRS notice about a mismatched TIN. Those are judgment calls with penalties attached.

BRIX tracks every payment to your 1099 subcontractors as the jobs happen and keeps expenses categorized, so the year-end totals are already there when your accountant asks. BRIX doesn't file 1099s or give tax advice; it keeps the records your CPA works from, synced with QuickBooks.

- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.

## Frequently asked questions

### What is Form 1099-NEC used for?

Form 1099-NEC reports nonemployee compensation: payments a business made for services to someone who isn't its employee, such as a subcontractor. The payer sends one copy to the worker and files one with the IRS so the income can be matched to the worker's tax return.

### Is the 1099 threshold $600 or $2,000?

Both, depending on the year. For payments made in 2025 and earlier, the threshold is $600. For payments made after December 31, 2025, it's $2,000 per payee per year, and the IRS says it may be adjusted for inflation beginning in 2027.

### Do I send a 1099 to an LLC subcontractor?

Usually yes. A single-member LLC taxed as a sole proprietorship and a multi-member LLC taxed as a partnership both get a 1099-NEC. Only an LLC that elected to be taxed as a C or S corporation is generally exempt. The sub's W-9 tells you which it is.

### Do I need to send a 1099 to a subcontractor I paid by credit card?

No. The IRS says payments made by credit card or payment card are reported on Form 1099-K by the card processor, not on Form 1099-NEC by you. Track them separately so they don't get added to the sub's 1099-NEC total.

### When are 1099-NEC forms due?

You must furnish the recipient copy and file with the IRS by January 31. When that falls on a weekend or legal holiday, the deadline moves to the next business day, so forms for 2026 payments are due February 1, 2027.

### What if my subcontractor won't fill out a W-9?

If a payee doesn't give you a taxpayer identification number, you're required to backup-withhold 24% of reportable payments and send it to the IRS. You can be held liable for amounts you should have withheld, so most contractors require the W-9 before the first payment.

### Do homeowners have to send contractors a 1099?

No. The IRS says to report payments only when they're made in the course of your trade or business, and personal payments aren't reportable. A homeowner paying for work on their own home doesn't file a 1099-NEC for the contractor.

### Can I e-file 1099-NEC forms for free?

Yes. The IRS's Information Returns Intake System (IRIS) lets businesses e-file Forms 1099 online at no cost. If you file 10 or more information returns of all types combined in a year, including W-2s, e-filing is required.

## Related

- [What Is a W-9 for Subcontractors?](https://www.brix.so/learn/w9-for-subcontractors)
- [W-2 vs. 1099: What's the Difference for Contractors?](https://www.brix.so/learn/w2-vs-1099)
- [What Are Payroll Taxes?](https://www.brix.so/learn/payroll-taxes)
- [What Is Self-Employment Tax?](https://www.brix.so/learn/self-employment-tax)
- [1099 vs. W-2 Cost Calculator: Employee or Subcontractor?](https://www.brix.so/tools/1099-vs-w2-calculator)
- [Taxes for Contractors: The 2026 Guide for Self-Employed Trades Owners](https://www.brix.so/guides/contractor-taxes)
- [How to Hire Technicians and Build a Pay Plan That Works](https://www.brix.so/guides/hire-and-pay-technicians)
- [Bookkeeping for contractors that keeps your books tax-ready all year](https://www.brix.so/features/bookkeeping-taxes)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [IRS — Form 1099-NEC and independent contractors FAQ ($600; $2,000 for payments made after Dec. 31, 2025)](https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-nec-independent-contractors/form-1099-nec-independent-contractors) (checked 2026-10-12)
- [IRS — Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026)](https://www.irs.gov/instructions/i1099mec) (checked 2026-10-12)
- [IRS — Understanding the Working Families Tax Cuts: business tax provisions](https://www.irs.gov/newsroom/understanding-the-working-families-tax-cuts-business-tax-provisions-youtube-video-text-script) (checked 2026-10-12)
- [IRS — Instructions for the Requester of Form W-9 (backup withholding rate 24%)](https://www.irs.gov/instructions/iw9) (checked 2026-10-12)
- [IRS — E-file information returns (10-return e-file requirement, IRIS)](https://www.irs.gov/filing/e-file-information-returns) (checked 2026-10-12)
- [IRS — Independent contractor (self-employed) or employee?](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) (checked 2026-10-12)

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Written by BRIX Editorial Team. Last updated 2026-10-12. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/learn/1099-for-subcontractors