Starting with payments made in 2026, the 1099-NEC threshold moves from $600 to $2,000. For many tech and SaaS companies, that sounds like less work at year-end. The harder question is rarely the dollar amount. It is knowing, vendor by vendor, who is reportable, how each one was paid and what documentation sits behind it, since that information often lives in several systems at once, from the AP tool to a payments app to a shared drive. Learn how CFO Plans supports tech companies.
Understanding the 2026 1099-NEC Threshold Change
The reporting threshold for nonemployee compensation rises from $600 to $2,000 for payments made on or after January 1, 2026, and it adjusts for inflation each year starting in 2027. Because January 31, 2027 falls on a Sunday, the filing deadline moves to Monday, February 1. The increase also covers many 1099-MISC payment types, with a few exceptions. It changes when a form is filed, not when a W-9 is collected, since no IRS rule ties W-9 collection to a dollar amount. Learn more about accounting support for tech startups.
Why Payment Method Determines Who Reports
Payments made by card or through processors such as PayPal or Stripe are reported by the processor on Form 1099-K, not on the 1099-NEC. If a vendor is paid partly by check and partly by card, only the check portion counts toward the threshold. Many tech companies use a mix of cards, ACH and payment apps, so one vendor’s total can sit in several places. Explore vendor and AP management for growing companies. beancountbeancount
How Entity Type and Location Change the Picture
Entity type adds another layer. Payments to most corporations are generally excluded, with attorney fees as a notable exception. Startups often work with freelancers, LLCs, agencies and corporations at the same time, and the right treatment depends on how each is classified on its W-9.
International contractors follow a different path. For foreign contractors, companies collect Form W-8BEN or W-8BEN-E instead of a W-9, and a 1099-NEC is generally not filed. A team with developers, designers and support staff in several countries may therefore have vendors on several documentation tracks at once.
Why Onboarding Records Matter More Than the Threshold
A vendor paid $1,800 through November can cross $2,000 in December, and once it does, the full year’s amount is reported, not only the portion above the threshold. Collecting a W-9 at onboarding, whatever the expected volume, avoids requesting tax information at that point for the first time. It also protects the company if the IRS later flags a taxpayer identification number mismatch, and backup withholding has been aligned with the same $2,000 threshold.
What the Vendor Record Needs to Hold
In practice, the question of who needs a 1099 gets answered from the vendor record. A useful record shows legal name, entity type, the tax documentation on file, taxpayer identification status and the usual payment method. When these fields live in different places, such as the AP tool, a shared drive and a payments app, the year-end list has to be assembled by hand from each.
Preparing Vendor Records for the January Filing Window
Many teams start with a vendor list pulled from the ledger, then check it against payment method and documentation. Doing this in November leaves room to request missing details while vendors are still responsive and the year’s payments are still being made. It also gives the team time to confirm which vendors fall below the threshold and need nothing further.
The threshold change simplifies who receives a form, while the records behind that decision remain part of the regular close. Talk with CFO Plans about how your vendor records and payment data fit together. Companies that keep those records current tend to find the January window straightforward.
