1099-NEC vs 1099-MISC: What’s The Difference?

Key takeaways

• Use Form 1099-NEC to report payments for services from contractors, freelancers, and other non-employees.
• Use Form 1099-MISC to report other business payments like rent, royalties, prizes, and legal fees.
• File Form 1099-NEC with the IRS by January 31, and file Form 1099-MISC by February 28 on paper or March 31 electronically.
• Remember that the reporting threshold rises from $600 to $2,000 for payments made in tax year 2026 and later.

Why are there two 1099 forms?

For the last 30+ years, there has been only one 1099 form that business owners needed to file to report their payments to contractors (codename: 1099-MISC). But in 2020, the IRS reintroduced a vintage tax form (1099-NEC) that hadn’t been used in decades.

Fine wine and music from the 80s making a comeback? Fun. Another tax form to file? Not so fun. You may need to file both forms, depending on who you’ve paid this year, and the forms have different due dates.

So here are the details of what’s included on each form and when they’re due.

What is Form 1099-NEC?

Form 1099-NEC reports non-employee compensation. Use it for payments you’ve made to self-employed workers, vendors, contractors, freelancers, suppliers, and distributors throughout the year to the IRS.

There used to be a box on the 1099-MISC for all your non-employee compensation. That box doesn’t exist anymore. It has now become a separate form, our old friend, Form 1099-NEC.

What is Form 1099-MISC?

Form 1099-MISC reports miscellaneous payments. It’s a mashup of your other annual business expenses. According to the IRS instructions, this includes:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
• At least $600 in:

1. Rents
2. Prizes and awards
3. Other income payments
4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate
5. Any fishing boat proceeds
6. Medical and health care payments
7. Crop insurance proceeds
8. Gross proceeds paid to an attorney
9. Section 409A deferrals
10. Non-qualified deferred compensation

Rent, insurance, and a lawyer are staples for many small businesses. So if you’ve paid for these kinds of expenses, this is likely a form you’ll file.

1099-NEC vs 1099-MISC: which form do you use?

Choosing the right form comes down to what you paid for. Use Form 1099-NEC when you paid someone for their services, like a contractor, freelancer, or consultant. Use Form 1099-MISC for other business payments, like rent, prizes, or legal fees.

• 1099-NEC: payments for services from non-employees.
• 1099-MISC: other payments, such as rent, royalties, prizes, and legal fees.
• Both: you may file both in the same year if you made both kinds of payments.

If you paid a contractor for work and also paid them rent, you could end up filing both forms for the same person.

1099 filing deadlines and reporting thresholds

Each form has its own deadline, so mark your calendar early to avoid late-filing penalties.

• Form 1099-NEC: file with the IRS by January 31.
• Form 1099-MISC: file with the IRS by February 28 on paper, or March 31 if you file electronically.

Reporting thresholds are changing too. For payments made in tax year 2026 and later, the reporting threshold rises from $600 to $2,000, so smaller payments may no longer need a form.

Get ahead of tax season

Track your business payments throughout the year. That way you (or your accountant) can file your 1099s correctly and on time.

Melio tracks every vendor payment in one place, so you can pull a year-end summary in a few clicks and hand your accountant clean 1099 totals. Sign up for Melio to get started.

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