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who should get a 1099

Anyone you pay for work who is not your employee may need a 1099 if they cross certain dollar thresholds, mainly $600 in a year for services in your trade or business. Different 1099 versions apply to different types of income like contractor pay, rents, interest, and dividends.

What a 1099 Is

A 1099 is an information return that tells the IRS (and the payee) about income that is not wages reported on a W‑2. It covers many categories: contractor payments, rents, royalties, prizes, interest, dividends, and more.

Who Should Get a 1099-NEC

For most small businesses and side hustles, the key form is 1099‑NEC (Nonemployee Compensation).

You generally issue a 1099‑NEC to:

  • Independent contractors, freelancers, gig workers, and consultants you paid $600 or more for services during the year.
  • Professionals like accountants, attorneys, engineers, architects, and other non‑employee service providers you paid $600 or more.
  • Non‑employee salespeople paid $600 or more in commissions.

Core conditions usually are:

  1. You paid them in the course of your trade or business (not purely personal).
  1. They are not your employee (employees belong on a W‑2).
  1. Total payments for services were $600 or more during the calendar year.

Who Should Get a 1099-MISC

Form 1099‑MISC covers certain miscellaneous types of income.

Common recipients include:

  • Landlords or property owners you paid $600 or more in rents (Box 1).
  • People or entities you paid $600 or more in prizes, awards, or other taxable “other income.”
  • People receiving $10 or more in royalties.

Businesses use 1099‑MISC when the payment is not wages and not nonemployee compensation (which belongs on 1099‑NEC).

Other Common 1099 Types

Several other 1099 forms go to people who received different kinds of income.

Examples:

  • 1099‑INT: For people who earned interest from bank accounts and similar accounts.
  • 1099‑DIV: For people who received dividends or capital gain distributions from investments.
  • 1099‑R: For people who got pension, IRA, annuity, or retirement plan distributions.
  • 1099‑B, 1099‑K and others: For brokerage transactions or certain payment platform and card payments (with specific thresholds and rules).

In all these cases, the payer (bank, broker, payment platform, plan administrator) sends the 1099 to the person who received the income and to the IRS.

Who Usually Does Not Get a 1099

There are important exceptions where you generally do not issue a 1099 even if you paid money.

Often you do not issue a 1099‑NEC or 1099‑MISC to:

  • C corporations and S corporations (and LLCs taxed as corporations), except for some special cases like attorney payments.
  • Employees, because their pay is reported on Form W‑2 instead.
  • Many foreign persons or foreign vendors who provide proper W‑8 forms and perform no services in the U.S.

Personal payments (like paying a neighbor to mow your own yard, outside of a business) usually do not require a 1099.

Practical Checklist: Who Should Get a 1099 From You?

Ask these questions about each payee:

  1. Did you pay them from a business (not just personally)? If no, typically no 1099.
  1. Are they an employee? If yes, use W‑2 instead of 1099.
  1. Did you pay them at least $600 total for services, rent, prizes, or other reportable income? If yes, they probably need a 1099‑NEC or 1099‑MISC.
  1. Are they a corporation? If yes, many—but not all—payments are exempt; attorney and some other payments are exceptions.

For real‑world nuance (like mixed services and products, or payments through platforms), tax pros strongly recommend getting a W‑9 from vendors first and confirming 1099 requirements with an accountant or current IRS guidance.

Bottom note: Information gathered from public forums or data available on the internet and portrayed here.