It’s 1099 filing season, and the deadline is almost here! While your organization is likely familiar with W-2s – which are used to report employee wages to the IRS – don’t forget about 1099s as well.
Form 1099-NEC and Form 1099-MISC are used to report nonemployee compensation and other miscellaneous service payments. You do not typically need to issue a 1099 for the payment of goods or merchandise.
There are several different types of 1099s. The most common type is Form 1099-NEC, which is used to report compensation for services performed by a nonemployee. This includes payments to independent contractors, consultants, or any other self-employed individual or non-incorporated company hired by your organization to perform a service.
There are three conditions that might require you to issue a 1099-NEC:
The payee is an independent contractor or nonemployee.
You paid them $600 or more between January 1 – December 31.
Their federal tax classification is an individual/sole proprietor, partnership, or trust/estate.
If all three of these conditions are true, then you likely need to issue a 1099-NEC.
Some nonprofits may also need to issue Form 1099-MISC, which is used to report royalties, rent, prizes, awards, or other miscellaneous service payments. The conditions for 1099-MISC are similar; however, be aware that the threshold for reporting royalties is only $10 per year.
For the 2025 tax year, all 1099-NEC forms must be filed with the IRS (and a copy remitted to the payee) no later than February 2, 2026. The usual deadline is January 31; however, since January 31, 2026 falls on a Saturday, the deadline shifts to the following Monday.
If you are required to file Form 1099-MISC, you have a little more time. For the 2025 tax year, all 1099-MISC forms must be remitted to the recipient by February 2, 2026 (or February 18, if Box 8 or 10 contain data) and they must be e-filed with the IRS by March 31, 2026 (or March 2 for paper filings).
If you fail to meet these deadlines, your organization might be on the hook for late fees. The financial penalties from the IRS can range from $60 per form (if filed within 30 days of the original deadline), up to more than $300 per form. The longer you wait, the higher the penalty increases – so don’t delay!
The good news is that you do not typically need to issue a 1099 to C corporations, S corporations, or LLCs that are classified as a corporation. But how do you know if a service provider is classified as a corporation? You must ask them to fill out Form W-9, Request for Taxpayer Identification Number and Certification, where they will identify their federal tax classification and other information you may need in order to prepare a 1099. It’s a good idea to obtain a W-9 from all service providers before you issue payment. This helps you to avoid any last-minute scrambling in January.