Who needs a 1099

Any unincorporated US person paid $600 or more in the calendar year for services rendered in your trade or business. The $600 is cumulative across all payments. Payments to corporations are generally exempt — except attorneys (always reportable) and medical/health-care providers (always reportable).

Collect W-9 first

Get a Form W-9 from every contractor before issuing the first payment. The W-9 establishes the legal name, TIN, and tax classification you will need to file the 1099. Without a W-9 you must withhold 24% backup withholding under Section 3406 — administratively painful.

Payment method matters

Payments made through a credit/debit card or third-party payment network (PayPal, Venmo Business) are NOT reported on 1099-NEC — the processor reports them on 1099-K. Payments by check, ACH, wire, or cash ARE reported on 1099-NEC. Track payment channel to avoid double-reporting.

Filing deadlines

Recipient copies and IRS Copy A both due January 31 — same date. No February 28 / March 31 extension like other 1099s. The IRS now requires electronic filing for any filer issuing 10 or more information returns of any combined type.

Penalties

$60 per return if filed within 30 days; $120 if by August 1; $310 if after August 1 or never. Intentional disregard: $630 minimum per return with no cap. The IRS has been aggressive on 1099 filing in recent years.

Where the IRS publishes guidance on this topic

The IRS publishes a layered set of free resources on most small-business tax topics: a relevant publication (usually one of Pub 334, 463, 535, 587, 946, 560, or 583), the instructions to the relevant form, the "Small Business and Self-Employed Tax Center" landing pages on IRS.gov, and the Audit Techniques Guides written for IRS examiners. Reading the agency's own materials is the cheapest tax education available. They are written in plain English, updated annually, and they reflect exactly the framework an examiner will apply if your return is selected.

How experienced filers approach this

Experienced self-employed filers and the CPAs who advise them treat this question as a recurring planning exercise rather than a one-time decision. They model the multi-year tax impact rather than just the current year, document the reasoning in a short workpaper that survives staff turnover and software changes, and revisit the analysis annually as facts and laws change. The discipline is not difficult — a half-day in January with last year's return, the current-year IRS publications, and a spreadsheet — but it is rare among DIY filers, which is precisely why it produces outsized results.