1099-NEC
Definition
The IRS form you send to independent contractors you paid for services during the year. For payments made in 2026 and later, the filing threshold is $2,000 per contractor (it was $600), indexed for inflation from 2027.
Want a deeper explanation?
Most growing e-commerce brands lean on contractors: designers, VAs, photographers, ad managers. Each one paid over the threshold needs a 1099-NEC, and the easiest way to get it right in January is to collect a W-9 before the first payment, not after.
Payments made by credit card or through platforms like PayPal are generally reported by the payment company instead, so they usually do not need your 1099. Watch for: missing W-9s and contractors coded to general expense accounts, which turn a one-hour January task into a week of chasing.
Example
You paid a freelance designer $4,500 and a VA $1,800 during 2026. The designer gets a 1099-NEC by January 31, 2027. The VA does not, because they fell under the $2,000 threshold.