Who Gets a 1099? The Complete Decision Guide (2026)

Every January, business owners ask the same question: who do I actually have to send a 1099 to? Send too few and you risk IRS penalties. Send them to vendors who don't need one and you create confusion (and extra work).

Here's the clear rule, the exceptions that trip everyone up, and a flowchart you can run for each payee in seconds.

The core rule: the $600 threshold

You must file a 1099-NEC ("Nonemployee Compensation") for anyone who meets all of these:

1. You paid them $600 or more during the calendar year, AND
2. The payment was for services (not products), AND
3. They are not a corporation (with a couple of exceptions below), AND
4. You paid them by cash, check, or bank transfer/ACH (not credit card or a third-party processor).

If all four are true, they get a 1099-NEC. If any one fails, they generally don't.

The decision flowchart

Run each vendor through this:

  Did you pay them $600+ this year?
            │
      no ──┤ ── no 1099
            │ yes
            ▼
  Was it for SERVICES (not just products)?
            │
      no ──┤ ── no 1099 (goods only)
            │ yes
            ▼
  Did you pay by credit card / PayPal / Stripe?
            │
     yes ──┤ ── no 1099 (processor files 1099-K)
            │ no  (cash/check/ACH)
            ▼
  Are they a C-corp or S-corp?
            │
     yes ──┤ ── no 1099 * (except attorneys)
            │ no  (individual / LLC / partnership)
            ▼
      ✅  FILE A 1099-NEC

The exceptions that trip people up

Corporations — usually exempt, with exceptions.

You generally don't issue a 1099 to a C-corp or S-corp. But you do for:

• Attorneys / law firms — always get a 1099 even if incorporated.
• Medical and health care payments to corporations.

The W-9 tells you the entity type, which is exactly why you collect one before paying.

LLCs — it depends how they're taxed.

A single-member LLC or an LLC taxed as a partnership gets a 1099. An LLC that elected C-corp or S-corp taxation generally doesn't. Again — the W-9 answers this.

Credit-card and third-party payments — never your responsibility.

If you paid via credit card, PayPal, Stripe, or similar, the processor reports it on a 1099-K. Issuing your own 1099 would double-report the income. This is the single most common mistake.

Products vs. services.

1099-NEC is for services. If you only bought goods, no 1099. Mixed invoices count the service portion.

What about 1099-NEC vs 1099-MISC?

Most contractor payments now go on the 1099-NEC. The 1099-MISC is for other payments like rent, prizes, and some legal settlements. Full breakdown: 1099-NEC vs 1099-MISC.

How to make this effortless next year

The pain isn't the rule — it's not having the data. Fix it up front:

1. Collect a [W-9](/tools/w9-generator) before the first payment. No W-9, no payment.
2. Track contractor payments all year with a contractor payments tool so totals are already reconciled.
3. Generate forms with the 1099 generator when January comes.

If you're deciding whether someone should even be a contractor vs. an employee first, start with 1099 vs W-2 classification.

Frequently asked questions

Who gets a 1099?

Any non-corporate person or business you paid $600 or more for services by cash, check, or bank transfer during the year. Corporations (except attorneys and some medical payments) and anyone paid by credit card or a processor are excluded.

Do I need to send a 1099 to an LLC?

It depends how the LLC is taxed. Single-member LLCs and partnerships get one; LLCs taxed as C- or S-corps generally don't. The W-9 tells you which.

What tool makes deciding and filing 1099s easier?

Use a platform like Holdings that tracks contractor payments year-round, stores W-9s, and generates 1099 forms — so who-gets-what is already sorted when filing season arrives.

What if I'm not sure whether someone needs one?

Collect a W-9 (it answers entity type), and when in doubt, filing a 1099 is safer than skipping it — the penalty is for failing to file, not for over-reporting.

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Getting 1099s right is a data problem, not a hard rule. Collect W-9s up front, track payments with contractor payments all year, and generate clean forms with the 1099 generator when the deadline comes.