Starting with payments made in 2026, a client sends you a Form 1099-NEC only if it paid you $2,000 or more during the year, up from $600. Fewer forms will arrive in January 2027, but nothing about what you owe changes: you report all of your business income, whether or not a 1099 shows up.
This guide is for independent consultants, fractional executives and coaches who bill several clients, and for anyone who pays a subcontractor.
What changed with the 1099-NEC threshold?
For years, a business that paid a freelancer, 1099 contractor, independent contractor or sole proprietor $600 or more in a year had to file Form 1099-NEC and send the worker a copy. For tax years beginning after 2025, the IRS instructions raise that threshold to $2,000. The IRS says the amount may be adjusted for inflation beginning in 2027.
The first forms under the new rule are the ones for 2026 payments, due to you and to the IRS by January 31, 2027.
Who does the new threshold affect?
Almost every self-employed professional. Three groups will notice the change most:
- Coaches and consultants with many small clients. A client who bought one $1,500 workshop no longer sends a form.
- Fractional executives with one or two large retainers. Little changes: retainers are far above $2,000.
- Anyone who pays subcontractors. You send fewer 1099-NECs yourself (more on that below).
Do I still have to report income if I don't get a 1099?
Yes. The IRS is direct about this: whether or not you receive a form, you must report the income on your tax return. A 1099 is a copy of what a client told the IRS. It is not the rule for what is taxable, and it is not a complete list of what you earned.
Worked example. An independent consultant has three clients in 2026:
| Client | Paid in 2026 | How they paid | Form she receives |
|---|---|---|---|
| Client A | $90,000 | Bank transfer | 1099-NEC for $90,000 |
| Client B | $1,800 | Bank transfer | None (under $2,000) |
| Client C | $25,000 | Card payments, 10 invoices | None (card payments go on a 1099-K, which needs more than $20,000 and more than 200 transactions) |
| Total | $116,800 | Forms show $90,000 |
Her forms add up to $90,000. Her income is $116,800. She reports $116,800. If she built her return from the forms alone, she would understate her income by $26,800.
Which clients will still send a 1099?
Expect a 1099-NEC from any client that paid you $2,000 or more by check, ACH or wire during 2026, as long as your business is not taxed as a C or S corporation. If you elected S-Corp status, most clients won't send you a 1099-NEC at all, because payments to corporations are generally exempt. Your S-Corp still reports all of its income on Form 1120-S.
That means the forms you receive in January are a partial list for almost everyone, and a very short one for an S-Corp owner or a coach with many small clients.
Why didn't I get a 1099 from a client who paid by card?
Payments you receive by credit card, debit card or a payment app are not reported on Form 1099-NEC. They belong on Form 1099-K, filed by the card processor or payment platform, and only when your payments through that platform total more than $20,000 and more than 200 transactions in the year. Many consultants who invoice by card will receive neither form. The income still counts.
Do client reimbursements count toward the $2,000?
They can. The IRS instructions say a travel reimbursement you did not account for to the client is included in the 1099-NEC amount. So a client who paid you $1,500 in fees and $900 of travel you never itemized would still send a 1099-NEC for $2,400. Sending itemized receipts with your expense report keeps reimbursements out of that number. Our guide to client-reimbursed expenses walks through the rule.
Do I need to send 1099s to people I pay?
If you pay a subcontractor, designer or virtual assistant for work in your business, the same $2,000 threshold applies to you as the payer for 2026 payments.
- Pay someone $6,000 for project work: send a 1099-NEC by January 31, 2027.
- Pay someone $1,500: no 1099-NEC needed.
- Pay a business that is taxed as a C or S corporation: generally no 1099-NEC (attorneys' fees are an exception).
- Pay by card or through a payment app: you don't file a 1099-NEC for those payments; the platform handles any 1099-K.
Collect a Form W-9 from each contractor before you pay them, so you have the name and taxpayer ID if a form is due.
What should I do before January?
- List every client who paid you in 2026 and the total each paid.
- Mark which clients should send a 1099-NEC ($2,000 or more, paid by bank transfer or check, and you are not a corporation).
- Check each form that arrives against your own records, and ask the client for a corrected form if a number is wrong.
- Use your full income, not the forms, for your January 15, 2027 estimated payment and your return.
- If you paid contractors, send their 1099-NECs by January 31, 2027.
Your fourth-quarter estimate should be based on everything you earned. Check your number with the free Sumly Quarterly Tax Calculator.
How should I track income now that fewer forms arrive?
Keep your own record of every payment by client as it lands, not in January. A running list works: date, client, amount and how they paid. Bank feeds make this easier, because every deposit is already there and you only label which client it came from. Keep client reimbursements separate from fees in that record, so your income total matches what you'll report.
The habit that keeps taxes painless sits on top of it: move 20% to 30% of every client payment into a savings account just for taxes, either a new one or one you already have, the day it lands.
FAQ
Is the 1099-NEC threshold $600 or $2,000 for 2026?
$2,000, for payments made in tax years beginning after 2025. Forms for 2025 payments, sent in early 2026, still used $600.
If a client paid me $1,900, is that income tax-free?
No. It is taxable business income like any other. The only difference is that the client doesn't file a form for it.
When are 1099-NECs due?
January 31. For 2026 payments, that is January 31, 2027, both to you and to the IRS.
Does the threshold change again after 2026?
The IRS says it may be adjusted for inflation beginning in 2027. Check the current year's instructions each January.
What if my 1099 is wrong?
Ask the client to issue a corrected form, and report the income you actually received. Keep your invoices and bank records to support the right number.
Rules are published by the IRS: Instructions for Forms 1099-MISC and 1099-NEC, Form 1099-K threshold FAQs and Understanding your Form 1099-K. Tax situations vary, so confirm specifics with your tax professional.
Know your income before the forms arrive
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