I know, I know. It’s only October, and here I am bringing up tax season already. 😂

But hear me out.

We’re getting closer to the holidays, which means before we know it, we’ll be taking down Christmas decorations, trying to remember what day it is, and suddenly realizing we have a bunch of year-end business stuff that needs our attention.

And one of those things? 1099s.

There have been some important changes to the 1099 reporting rules for the 2026 tax year, and if you’re a small business owner who pays contractors, freelancers, or other service providers, you’ll want to know about them.

The good news is that you don’t have to figure everything out today. But spending a little time getting organized now can make January a whole lot less stressful.

So let’s talk about what’s changed, what it means for your business, and what you can start doing now to get ahead.

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First Things First: What Is a 1099-NEC?

If you’ve hired someone who isn’t an employee to do work for your business, you’ve probably heard of a 1099-NEC.

This is the form generally used to report certain payments made to nonemployees for services.

Think freelance graphic designers, virtual assistants, subcontractors, or other independent service providers you’ve hired throughout the year.

And for 2026, there’s a pretty big change.

The New 1099-NEC Threshold Is $2,000

Previously, the federal reporting threshold for nonemployee compensation was $600.

For payments made during the 2026 calendar year, that threshold has increased to $2,000.

This means if your business pays a qualifying nonemployee $2,000 or more during the year for services, you may need to issue them a 1099-NEC.

For example, let’s say you hired a freelance designer to help with your branding and paid them $2,500 throughout 2026.

Depending on how you paid them and how their business is structured, you may be required to send them a 1099-NEC.

But here’s where we want you to be careful.

Not every payment over $2,000 automatically requires a 1099.

There are exceptions depending on who received the payment, what it was for, and how you paid them.

That’s why we always recommend checking with your tax preparer if you’re unsure. We’d much rather you ask the question now than find out in January that something was missed.

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Okay, But What About 1099-Ks?

There’s been a LOT of back-and-forth around this one over the past few years, so if you’re confused, you’re definitely not alone.

A 1099-K is different from a 1099-NEC.

Generally speaking, a 1099-K reports certain payments received through payment cards, payment apps, online marketplaces, and other third-party payment networks.

Think platforms and payment processors you may already use in your business, like PayPal, Stripe, or other online payment systems.

The 1099-K Threshold Is Back to $20,000 AND 200 Transactions

For third-party payment networks, the federal reporting threshold is:

More than $20,000 in gross reportable payments AND more than 200 transactions during the calendar year.

Both conditions must be met for that federal third-party network reporting requirement to apply.

And here’s an important distinction: this threshold applies to third-party payment networks. Payment-card transactions have different reporting rules, and some states have lower reporting thresholds.

So receiving less than $20,000 or having fewer than 201 transactions doesn’t necessarily guarantee you won’t receive a 1099-K.

The other important thing to understand is who sends the form.

Generally, the payment settlement entity is responsible for issuing the 1099-K, not the business receiving the money.

So no, we’re not asking you to start preparing your own 1099-Ks. 😂

But we do want you to understand what these forms are when they start showing up.

And remember, not receiving a 1099-K doesn’t mean the income isn’t taxable. Your business still needs to accurately track and report its income.

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Wait… What If I Paid a Contractor Through a Payment Processor?

This is where things can get a little confusing.

Let’s say you paid a contractor $3,000 this year, but you paid them through an online payment platform instead of writing a check or sending a direct bank payment.

Do you still need to send them a 1099-NEC?

Not necessarily.

Payments made through qualifying payment-card or third-party network transactions are generally handled under the 1099-K reporting rules instead of being reported again on a 1099-NEC.

And that distinction still matters even if the processor doesn’t end up issuing a 1099-K because its reporting threshold wasn’t met.

The tricky part is that not every payment made through an app or online platform is processed the same way.

This is exactly why we don’t recommend guessing based on the dollar amount alone.

If you’re unsure whether a particular contractor payment needs to be included on a 1099-NEC, talk with your bookkeeper and tax preparer before filing.

The goal is to report what needs to be reported without accidentally reporting the same payments twice.

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Okay… What Do I Actually Need to Do Right Now?

Here’s the good news.

You don’t need to start filing 1099s in October.

But you can absolutely make life easier for yourself by getting a few things organized before the holidays.

1. Take a Look at Who You’ve Paid This Year

Think about the contractors, freelancers, and service providers you’ve worked with throughout 2026.

Do you know how much you’ve paid each of them?

And more importantly, do you know where to find that information?

If you’re keeping up with your bookkeeping every month, this should be a relatively easy thing to review.

If your payments are scattered across bank accounts, payment apps, and a few different spreadsheets…well, this might take a little more digging. 😂

This is one of the reasons we talk so much about keeping accurate books throughout the year.

We actually talked about this in one of our recent blog posts, where we break down why good bookkeeping is about so much more than just keeping track of receipts.

 It’s not just about having clean financial reports. It’s also about being able to find the information you need when things like tax season roll around.

2. Start Collecting W-9s

If you know you’ve worked with contractors who may need a 1099, now is a great time to make sure you have their W-9s.

A W-9 provides the information needed to prepare certain tax forms, including the contractor’s legal name and taxpayer identification number.

And trust me, it’s a whole lot easier to ask for that information now than to track someone down in January when everyone is coming back from the holidays and their inbox has approximately 8,437 emails in it.

If you’re not sure which contractors you need W-9s from, start by reviewing your payment records and checking with your tax preparer.

3. Find Out Who Is Handling Your 1099 Filings

This is another one that can easily get overlooked.

If you use a payroll service provider that already prepares and files your contractor 1099s, great!

That’s one less thing you need to worry about.

Just make sure you know exactly what they’re handling.

For example, if you paid a contractor outside of your payroll software, those payments might not be included in the information your provider has.

It’s worth taking a few minutes to double-check rather than assuming everything is covered.

And if you’re a current Young Wealth Co. client, here’s what you can expect from us.

We’re already reviewing our clients’ books and contractor payments to help identify who may need a 1099 for 2026.

We’ll reach out directly with information about any W-9s we need you to collect and send our way.

We also handle 1099 preparation and filing for our current bookkeeping clients, as long as we receive the necessary information within our requested timeline.

If information comes in at the last minute and requires rushed processing, additional rush fees may apply.

Which is another reason we’re talking about all of this now instead of waiting until January!

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When Are 1099s Due for the 2026 Tax Year?

Here’s another date you’ll want on your calendar.

February 1, 2027 — General filing and recipient deadline for 2026 Forms 1099-NEC.

Normally, the deadline falls on January 31. But because January 31, 2027 is a Sunday, the deadline moves to the next business day.

That means qualifying 1099-NEC forms generally need to be provided to recipients and filed with the IRS by February 1, 2027.

Keep in mind that different types of 1099 forms may have different deadlines.

And if you’re working with a bookkeeper, payroll provider, or tax professional to prepare these forms, they’ll likely need your information well before the IRS deadline.

So please don’t read February 1 and think that means you can wait until January 31 to start gathering everything. 😂

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Your January Self Will Thank You

I know 1099s probably aren’t at the top of your list of things you want to think about right now.

Especially with the holidays coming up and everything else you’re juggling as a business owner.

But that’s exactly why we’re bringing this up in October.

The goal isn’t to add more to your plate.

It’s to help you avoid that last-minute scramble when you’re already trying to wrap up year-end bookkeeping, get ready for tax season, and settle back into your normal routine after the holidays.

So here’s your friendly reminder:

Take a look at your contractor payments. Start gathering those W-9s. Make sure you know who’s handling your filings.

A little organization now = a much calmer January.

And if you’re sitting there thinking, I honestly have no idea who I’ve paid or how much I’ve paid them this year…

That might be a pretty good sign that it’s time to get some help with your books.

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Young Wealth Tip of the Week

Just because you paid someone through an app doesn’t mean you should automatically assume the 1099 situation is handled.

The payment method matters, the type of payment matters, and having accurate records makes it a whole lot easier to figure out what actually needs to happen.

When in doubt, ask before you file.

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Ready to Get Your Bookkeeping Off Your Plate in 2027?

If you’ve been telling yourself all year that you’re finally going to get your bookkeeping organized, this might be your sign to make it happen in 2027. 🤍

Young Wealth Co. has officially closed onboarding for the remainder of 2026, but that doesn’t mean you have to wait to take the next step!

We’re currently accepting names on our February 2027 waitlist for business owners who are ready to get some help with their books.

Whether you’re looking for ongoing monthly bookkeeping or need help cleaning up your books, we’d love to chat about how we can support you in the new year.

And just a heads-up, our new-client pricing will be increasing in 2027, so that’s something to keep in mind as you’re planning ahead.

We know there’s already a lot on your plate as a business owner, especially as we head into the holidays and tax season. Keeping track of your finances, understanding your numbers, and staying on top of your bookkeeping shouldn’t have to be another thing constantly hanging over your head.

Ready to make bookkeeping one less thing you have to worry about next year?

Join our February 2027 waitlist here!

Let’s make 2027 the year you finally get your books in a better place and have one less thing to stress about.

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A Quick Disclaimer

Young Wealth Co. is a bookkeeping company, not a CPA firm or tax advisory practice. This article is for general educational purposes only and is not tax or legal advice. Form 1099 reporting requirements can vary depending on the type of payment, how it was made, who received it, and your specific circumstances. While we help our bookkeeping clients review records and prepare and file applicable 1099 forms, please consult your CPA or qualified tax professional for guidance on your business’s tax reporting obligations.

Stick around, friend. Your next money breakthrough might just be one blog post away.

Hannah & The Young Wealth Co. Team