A 1099-NEC is an IRS form that reports nonemployee compensation: money a business paid to an independent contractor, freelancer, or other self-employed person. If a payer paid you at or above the reporting threshold for services in a year ($600 through 2025, $2,000 starting with payments after 2025), they must send you and the IRS a 1099-NEC showing the total in Box 1, renumbered Box 1a on forms for 2026 and later. You owe income and self-employment tax on it.

What does it mean if I get a 1099-NEC?

Getting a 1099-NEC means a business paid you as an independent contractor, not an employee, so no income, Social Security, or Medicare tax was withheld. You received your pay in full and are responsible for the taxes yourself. You report the Box 1 (or 1a) amount as self-employment income on Schedule C and pay self-employment tax via Schedule SE.

What's the difference between a 1099-NEC and a 1099-MISC?

The 1099-NEC reports payments for services to nonemployees: contractor and freelance income. The 1099-MISC covers other payments like rent, royalties, prizes, and legal settlements. Before 2020, contractor pay went in Box 7 of the 1099-MISC; the IRS moved it to the dedicated 1099-NEC to separate it cleanly.

Do I have to pay taxes on a 1099-NEC?

Yes. Income on a 1099-NEC is self-employment income with no taxes withheld, so you owe both income tax and self-employment tax (Social Security and Medicare, about 15.3%). You report it on Schedule C and Schedule SE. You also owe tax on contractor income below the reporting threshold even if no 1099-NEC was issued.

When should I receive my 1099-NEC?

Payers must furnish your 1099-NEC by January 31 for the prior tax year, and file the same copy with the IRS by that date. If you earned enough from a client and haven't received a form by early February, contact the payer, but you must still report the income whether or not the form arrives.

How long should I keep a 1099-NEC?

Keep each 1099-NEC at least 4 years after filing the related return, and ideally 7. The IRS audit window is 3 years normally and 6 years if income was under-reported by 25% or more. Contractor income is a common audit trigger, so retaining the form lets you prove what was reported if questions arise later.

Tax

Form 1099-NEC

A Form 1099-NEC is an IRS information return that reports nonemployee compensation. Businesses issue it to independent contractors, freelancers, and other self-employed people they paid above the reporting threshold during the tax year: $600 for tax years through 2025, rising to $2,000 for payments made after December 31, 2025. Box 1 shows the total nonemployee compensation on forms through tax year 2025, renumbered Box 1a on the December 2026 revision, and a copy goes to both the recipient and the IRS.

For payments made after December 31, 2025, the 1099-NEC reporting threshold rose from $600 to $2,000 under the One Big Beautiful Bill Act, and will be adjusted for inflation starting in 2027, the first change to the $600 floor since 1954.

Source: IRS: Reporting payments to independent contractors

Written & maintained by the Granite team · Last updated October 2026

Overview

Form 1099-NEC ("Nonemployee Compensation") is issued by any business or person who paid an independent contractor at or above the reporting threshold for services during the year. That threshold was $600 for tax years through 2025; under the One Big Beautiful Bill Act it rose to $2,000 for payments made after December 31, 2025, and will be indexed for inflation starting in 2027. The IRS revived the form in 2020 to split nonemployee pay out of Box 7 on the old 1099-MISC; it is now the standard way contractor income gets reported. The payer files Copy A with the IRS and sends Copy B to the recipient, both by January 31. The IRS renumbered the boxes on the December 2026 revision, first used to report payments made in 2026: nonemployee compensation moves from Box 1 to Box 1a, and new Boxes 1b, 1c, and 1d report cash tips, a Treasury tipped-occupation code, and overtime compensation, because the 2025 tax law created deductions for tips and overtime. Forms for 2025 and earlier still show the amount in Box 1.

If you receive a 1099-NEC, you are being treated as self-employed for that income. No taxes were withheld, so you are responsible for income tax and self-employment (Social Security and Medicare) tax on it. You report the amount on Schedule C and Schedule SE when you file. A payer does not have to send a 1099-NEC for amounts under the threshold, but you still owe tax on that income regardless of whether a form was issued.

When you’ll get your Form 1099-NEC

You did freelance, contract, or gig work and a client paid you above the reporting threshold during the year
You run a sole proprietorship or single-member LLC that provided services to a business
You earned consulting, design, writing, or trade work income outside of W-2 employment
You received director fees, commissions, or prizes tied to services as a nonemployee
A platform or company paid you directly (not through payroll) for work performed

What’s on your Form 1099-NEC

These are the fields you’ll find on one, and what each one tells you.

Tax Year: The calendar year the income was earned and reported; determines which year's return it belongs on.
Payer Name: The business or person who paid you and issued the form (the client or company).
Payer's TIN: The payer's federal Taxpayer Identification Number (EIN or SSN) identifying who reported the income to the IRS.
Recipient Name: Your name (or your business's name) as the contractor who received the payment.
Box 1: Nonemployee Compensation: The total amount you were paid for services during the year, the headline number you report as self-employment income. On forms for 2026 and later it is Box 1a.
Box 4: Federal Income Tax Withheld: Any federal tax already withheld (usually $0 unless backup withholding applied); this counts toward what you've already paid.

How long to keep it

4 years

Keep for 4 years from the date you filed the related return

The IRS can audit a return for 3 years normally, or 6 years if you under-reported income by 25% or more. Because contractor income is exactly what gets scrutinized, keeping each 1099-NEC for at least 4 years (7 to fully outlast the 6-year window) lets you prove what was reported if the IRS or a client's records disagree.

Figure out your exact shred date

Enter the date you filed the related return and we'll do the math.

This is general guidance, not tax advice. Your own return can change the window, so ask your tax preparer if you're unsure.

How Granite handles your Form 1099-NEC

Drop a 1099-NEC into Granite and it's recognized on upload: it reads the form, pulls the tax year, payer name, payer TIN, your name, the nonemployee compensation (Box 1, or Box 1a on 2026 forms), and any Box 4 withholding into structured fields, then titles it (e.g. "Acme 2024 1099-NEC") and files it into your "Tax 2024" collection alongside your W-2s, 1040, and state return. When tax season comes, every contractor form for that year is one search away instead of scattered across email and folders.

FAQ

Form 1099-NEC: common questions

What is a 1099-NEC?: A 1099-NEC is an IRS form that reports nonemployee compensation: money a business paid to an independent contractor, freelancer, or other self-employed person. If a payer paid you at or above the reporting threshold for services in a year ($600 through 2025, $2,000 starting with payments after 2025), they must send you and the IRS a 1099-NEC showing the total in Box 1, renumbered Box 1a on forms for 2026 and later. You owe income and self-employment tax on it.
What does it mean if I get a 1099-NEC?: Getting a 1099-NEC means a business paid you as an independent contractor, not an employee, so no income, Social Security, or Medicare tax was withheld. You received your pay in full and are responsible for the taxes yourself. You report the Box 1 (or 1a) amount as self-employment income on Schedule C and pay self-employment tax via Schedule SE.
What's the difference between a 1099-NEC and a 1099-MISC?: The 1099-NEC reports payments for services to nonemployees: contractor and freelance income. The 1099-MISC covers other payments like rent, royalties, prizes, and legal settlements. Before 2020, contractor pay went in Box 7 of the 1099-MISC; the IRS moved it to the dedicated 1099-NEC to separate it cleanly.
Do I have to pay taxes on a 1099-NEC?: Yes. Income on a 1099-NEC is self-employment income with no taxes withheld, so you owe both income tax and self-employment tax (Social Security and Medicare, about 15.3%). You report it on Schedule C and Schedule SE. You also owe tax on contractor income below the reporting threshold even if no 1099-NEC was issued.
When should I receive my 1099-NEC?: Payers must furnish your 1099-NEC by January 31 for the prior tax year, and file the same copy with the IRS by that date. If you earned enough from a client and haven't received a form by early February, contact the payer, but you must still report the income whether or not the form arrives.
How long should I keep a 1099-NEC?: Keep each 1099-NEC at least 4 years after filing the related return, and ideally 7. The IRS audit window is 3 years normally and 6 years if income was under-reported by 25% or more. Contractor income is a common audit trigger, so retaining the form lets you prove what was reported if questions arise later.

Sources

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