Form 1099-NEC is an extremely important tax requirement for companies that hire service providers in the United States. Issued by the IRS (U.S. Internal Revenue Service), it must be filed whenever you make payments to certain types of contractors, whether individuals or entities, who are U.S. tax residents.
In which cases should I issue a Form 1099-NEC to my vendor?
Your company must issue a 1099 to an independent service provider if:
– You paid USD $600 or more during the year to a service provider (physical products do not require reporting).
– The provider is an independent contractor, not an employee.
– The service provider is an individual or entity based in the United States and has submitted a W-9 form to you.
– The service provider is not a C Corporation or S Corporation (with exceptions).
– The payment was not made via credit card or digital platforms (PayPal, Stripe, Venmo, etc.), as these providers must issue the appropriate form (usually Form 1099-K) directly to the service provider.
What is the filing deadline?
Form 1099-NEC is an annual requirement and must be filed by January 31 of the year following the payments made. One copy is sent to the service provider and another directly to the IRS.
What happens if I don’t file or file after the deadline?
Failure to file or late filing of Form 1099-NEC may result in significant penalties from the IRS, which vary depending on how late the filing is and how many forms were not submitted. In addition, noncompliance may create tax complications for your company.
What information do I need from my service provider in order to file the form?
To prepare a 1099, you need:
– A W-9 form provided by the service provider.
– The total amount paid during the tax year through bank transfers, cash, ACH, checks, Zelle, or similar apps.
How do I file Form 1099-NEC?
With Globalfy’s support: (RECOMMENDED)
If you are a client on Globalfy’s Scale plan, you don’t need to worry: we take care of the entire process for your company. If you are not yet a Scale client, get in touch with us so we can guide you more accurately based on your situation.
If you are on the Essential or Starter plan, you can purchase our support directly through our Platform. You will submit the W-9 form from your service providers and we will handle the rest. There is a fee of $100 for the first form and $50 for each additional form. The deadline to purchase this service is January 15, 2026.
Through your Mercury account:
The fintech Mercury allows you to file 1099-NEC forms directly on the platform, with different fee levels. As it is an independent platform, our team will not be able to provide support during the process.
Through online software:
There are several online software solutions that make it easier to file the forms online using a self-service model.