Paying Contractors in 2026? What Long Island Business Owners Should Know About Form 1099-NEC
If you run a small business on Long Island and paid a landscaper, a bookkeeper, a graphic designer or a subcontractor this year, there is a good chance a Form 1099-NEC is in your future. I help Nassau and Suffolk business owners with this every year, and the most common problem I see is not the form itself. It is missing information that is much easier to collect in November than in late January.
What a 1099-NEC is
Form 1099-NEC reports nonemployee compensation. If you pay someone for services as part of your trade or business, and that person is not your employee, you may need to report what you paid them to both the IRS and the person who received the money. The IRS says this includes payments for services performed by someone who is not your employee, including parts and materials, and payments to attorneys.
The threshold changed for 2026
For years the reporting threshold was $600. According to the current IRS instructions, it is $2,000 for payments made in 2026. For payments made after 2026, the IRS points filers to Publication 1099 for the inflation-adjusted amount, so I would not assume the number stays the same next year.
One exception applies at any dollar amount: if you withheld federal income tax from someone under the backup withholding rules, you file a 1099-NEC for that person regardless of how much you paid.
Who usually does not get a 1099-NEC
Generally, the form is for payments made in the course of your business, so personal payments are not included. The IRS also says payments to a corporation usually do not need a 1099-NEC, with exceptions for medical and legal services. Whether a particular payee is a corporation, an LLC taxed a certain way, or a sole proprietor is not always obvious, which is one reason I like to collect paperwork up front.
Start with a Form W-9
The IRS recommends getting a Form W-9 from each contractor once you have determined they are an independent contractor. The W-9 gives you the correct name and taxpayer identification number to put on the 1099. The IRS says to keep it in your files for four years.
If a contractor does not give you a taxpayer identification number, or the IRS tells you the number is wrong and the payee does not correct it, backup withholding at 24 percent may apply, and you would report it on Form 945. That is a good reason not to wait until the filing deadline to find out you are missing a number.
The deadline
The IRS instructions say Form 1099-NEC must be furnished to the recipient and filed with the IRS by January 31. In 2027, January 31 falls on a Sunday. The IRS says that when a filing due date lands on a weekend or legal holiday, you can file on the next business day, which would be Monday, February 1, 2027. If you are close to the line, confirm the date with current IRS guidance or with me.
Also worth knowing: the IRS says that filers of 10 or more information returns in a calendar year generally must file electronically, and that starting with the 2027 filing season (tax year 2026 returns), the IRS is retiring the FIRE system and IRIS becomes the electronic platform.
A simple checklist for November and December
- List everyone you paid for services this year, including people you paid by check, bank transfer, or a payment app.
- Total what you paid each person or business for the year and compare it with the $2,000 threshold.
- Request a W-9 from anyone you do not have one for.
- Confirm names, addresses and taxpayer identification numbers match what the contractor gave you.
- Separate employees from contractors. If someone works set hours, with your tools, under your direction, the classification is worth a closer look before you issue any form.
- Keep your invoices and proof of payment together with the W-9.
Why this matters for your own return
If you file a Schedule C, contractor payments are often one of your larger deductions. Clean records support that deduction and make the 1099 process painless. If a payment was personal rather than business, it typically does not belong on a 1099 or on your Schedule C.
This post is general information, not advice for your specific situation. Every business is a little different, and the right answer can depend on how a worker is classified and how a payee is set up. If you have questions about 1099s, contractors or your Schedule C records, call or text me at 631-625-5877. I work remotely or at your home by appointment.
Sources
This article is general information, current as of October 29, 2026, and is not tax, legal, or financial advice for your specific situation. Tax rules change, so please check with a professional before acting.