The split
Form 1099-NEC reports nonemployee compensation: payments of fees for services to someone who is not your employee, such as a freelancer, consultant, or independent contractor. Form 1099-MISC reports other kinds of payments, such as rent, royalties, prizes and awards, and certain other income.
The question is what the payment is for, not who the payee is. The same vendor may need one form for services and another for rent.
Common payments
A designer you pay $4,000 for work: 1099-NEC. A landlord you pay rent for your office: 1099-MISC, if the amount meets the threshold. A royalty you pay for use of a license: 1099-MISC. Attorneys are a special case, and payments to them can need a form even when the attorney is incorporated.
Payments to a corporation are often excluded, but not always, and payments you make by credit card or through a third-party network are generally reported by the processor, not by you.
Deadlines
Form 1099-NEC is generally due to the recipient and the IRS by January 31. Form 1099-MISC is generally due to recipients by January 31, with a later filing date for the IRS. The IRS adjusts dates when they fall on weekends or holidays, so check the current instructions.
Thresholds change
The dollar amount at which you must file has changed in recent years and may change again. Check the current IRS instructions for the year you are reporting. Do not rely on an older article, including this one.
Make it routine
Collect a W-9 before the first payment, tag the vendor as reportable, and use an account that separates fees for services from rent and other payments. That setup makes the year-end report a query, not a hunt.
Where the forms came from
Contractor pay used to be reported in a box on Form 1099-MISC. The IRS brought back Form 1099-NEC starting with tax year 2020 so that contractor pay would have its own form and its own deadline. That is why older articles and some software still refer to a box on the 1099-MISC for the same payments.
The common cases side by side
Use this as a quick guide, and check the instructions when a payment is unusual.
| Payment | Usual form | Note |
|---|---|---|
| Fees to a freelance developer | 1099-NEC | Services by someone who is not your employee |
| Rent to an individual landlord | 1099-MISC | Rents are reported in a box on the MISC |
| Royalties for a license | 1099-MISC | Separate box from rents |
| Prizes and awards | 1099-MISC | Not wages, not services |
| Fees to a lawyer for services | 1099-NEC | Attorneys are often reportable even when incorporated |
| Anything paid by credit card | None from you | The payment processor reports card payments |
Frequently asked questions
What if I used the wrong form?
File a corrected form. The IRS instructions explain how.
Do I report reimbursed expenses?
Reimbursements to a contractor for their costs can be included in what you paid depending on the arrangement. Check the instructions or ask your preparer.
Do I need a form for a foreign contractor?
Possibly a different form. Foreign payees are covered by other rules, so ask a tax professional.