Short answer. For tax years beginning after 2025, you generally file Form 1099-NEC or 1099-MISC for a payee only when the year's payments reach $2,000, and the IRS says that amount may be adjusted for inflation beginning in 2027. Payments made in 2025 still used $600. Some boxes did not change: royalties $10, gross proceeds paid to an attorney $600, direct sales $5,000. Card and payment-app payments go on Form 1099-K from the processor, not on your 1099-NEC. New Jersey's NJ-WT guide (September 2025) asks for copies of Forms 1099 when $1,000 or more was paid.
What changed and what didn't
| Payment | 2025 payments | 2026 payments |
|---|---|---|
| Services by a non-employee (1099-NEC box 1) and other amounts that used the general $600 level | $600 | $2,000 |
| Royalties (1099-MISC box 2) | $10 | $10 |
| Gross proceeds paid to an attorney (1099-MISC box 10) | $600 | $600 |
| Direct sales of consumer products for resale | $5,000 | $5,000 |
| Any payment with federal income tax withheld | Any amount | Any amount |
The same $2,000 change applies to backup withholding. And payments made by credit card or through a payment network are reported by the payment settlement entity on Form 1099-K. The 1099 instructions say they "are not subject to reporting on Form 1099-MISC or Form 1099-NEC."
Step by step for a business closing 2026
- Pull a payee list for 2026. From your books, total every vendor and contractor by payee, with the payment method.
- Set aside card and app payments. Anything you paid by credit card or through a payment network comes off your 1099 list for that payee.
- Apply the right threshold to each category. $2,000 for services and most other boxes, $10 for royalties, $600 for attorney gross proceeds, and any amount where you withheld.
- Chase W-9s now. Payees close to $2,000 may cross it in December. Request a W-9 before you pay so name and TIN are ready.
- Check New Jersey separately. The NJ-WT guide, dated September 2025, says payers file copies of Forms 1099 with New Jersey when $1,000 or more was paid in the year or New Jersey tax was withheld, by February 15, electronically. It was written before the federal change took effect. For payees between $1,000 and $1,999, check with the Division of Taxation or your preparer about what New Jersey expects.
- Put the dates on the calendar. Form 1099-NEC is due to recipients and the IRS on January 31. In 2027 that is a Sunday, so the date is February 1, 2027.
For freelancers and contractors
You may receive fewer forms for 2026, because clients that paid you less than $2,000 aren't required to send one. That doesn't change what you report. The IRS reminds taxpayers they "must report all income" received during the year, whether or not a form arrives. Keep your own invoice log and match deposits to it; your own records are what you report from, and the forms are a cross-check.
If clients paid you by card or through an app, look for a Form 1099-K from the processor instead of a 1099-NEC from the client. A third-party settlement organization files one when payments are over $20,000 and there were more than 200 transactions.
A landscaping company's 2026 vendor list
| Payee | Paid in 2026 | How paid | Federal form from the company |
|---|---|---|---|
| Hardscape subcontractor | $2,400 | Check | 1099-NEC (at or over $2,000) |
| Tree removal contractor | $1,750 | Check | None federally; check New Jersey's $1,000 rule |
| Irrigation contractor | $5,200 | Business credit card | None from the company; the card processor reports on 1099-K |
| Designer licensing a planting plan | $40 royalty | Check | 1099-MISC box 2 ($10 rule) |
For comparison, if the tree removal payment had been made in 2025, the $600 threshold would have applied and the contractor would have received a 1099-NEC.
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Mix-ups to avoid
- Using the new number for the old year. A late 2025 form still uses $600. Check the year of payment, not the date you prepare the form.
- Counting card payments twice. If a contractor was paid partly by check and partly by card, only the check portion counts toward your 1099-NEC total; the card portion is the processor's to report.
- Dropping the W-9 habit. Backup withholding follows the same $2,000 level, and a payee can cross it with one late invoice. A W-9 on file before the first payment saves a scramble in January.
- Forgetting the state. A payee you leave off the federal list may still matter for New Jersey under the NJ-WT guide's $1,000 language.
Records to keep
Keep the W-9 for each payee, the payee totals you used, notes on which payments were by card or app, and copies of the forms you filed, for both the IRS and New Jersey.
Official sources
- IRS: Instructions for Forms 1099-MISC and 1099-NEC (Rev. 12/2026)
- NJ Division of Taxation: NJ-WT, New Jersey Income Tax Withholding Instructions (September 2025)
- IRS: Form 1099-K FAQs, what to do if you receive a Form 1099-K (updated June 27, 2026)
- IRS Publication 1099 (2026), General Instructions for Certain Information Returns
Checked November 2026 on irs.gov and nj.gov.
Common questions
Does the $2,000 threshold apply to payments I made in 2025?
No. The IRS instructions apply it to tax years beginning after 2025. Payments made in 2025 used the $600 threshold.
Will the $2,000 amount change?
The 1099 instructions say it may be adjusted for inflation beginning in calendar year 2027.
I paid a contractor through a payment app. Do I send a 1099-NEC?
Payments made by card or through a payment network are reported on Form 1099-K by the payment settlement entity, not on Form 1099-NEC.
Did the threshold change for royalties and attorney payments?
No. Royalties stay at $10 and gross proceeds paid to an attorney stay at $600 in the current instructions.
I'm a freelancer and got no 1099 from a client. Do I still report the income?
Yes. Income is reportable whether or not a form arrives.
Does New Jersey use $2,000 too?
New Jersey's NJ-WT guide, dated September 2025, says copies of Forms 1099 are due to the State when $1,000 or more was paid. Check with the Division of Taxation about payees between $1,000 and $1,999.
Related guides: 1099-K from PayPal, Venmo or Etsy · Tax documents checklist for 2027 · Preparing Form 1099-NEC from your books