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The New $2,000 1099 Threshold: How to Get Ready for January 2027

By Steven Wu, CPA · November 2, 2026 · Reflects Pub. L. 119-21 ("OBBBA")

If you pay contractors, freelancers, landlords, or attorneys through your business, you have a 1099 deadline coming up at the start of 2027. This year it works a little differently. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) changed several information-reporting rules, and the first returns under the new rules are due in early 2027.

What changed for Forms 1099-NEC and 1099-MISC

For many years the threshold for most 1099-NEC and 1099-MISC reporting was $600. Section 70433 of the new law raised it to $2,000 for payments made after December 31, 2025.

In practice, for payments you made during calendar year 2026:

  • Form 1099-NEC: file one for each non-employee (an independent contractor, for example) you paid $2,000 or more for services in the course of your business. Payments to attorneys for services also count.
  • Form 1099-MISC: the $2,000 threshold now applies to items like rents, prizes and awards, and other income. Royalties still use the $10 threshold.
  • Starting in 2027, the $2,000 amount is indexed for inflation. The IRS will publish the adjusted figure, so check before you file for 2027 payments.

The $2,000 test is per payee for the whole calendar year, not per invoice.

What didn't change

  • Backup withholding overrides the threshold. If you withheld any federal income tax under the backup withholding rules, you must file a 1099 for that payee no matter how small the payment was.
  • Card and payment-app payments still go on Form 1099-K, not on your 1099s. Per IRS instructions, the payment processor reports these, not you.
  • All income is still taxable. A higher reporting threshold changes who gets a form. It doesn't change what anyone has to report on their own return.

Form 1099-K: back to $20,000 and 200 transactions

If your business gets paid through payment apps or online marketplaces, this part affects you as the payee.

The same law retroactively restored the original Form 1099-K threshold for third-party settlement organizations (TPSOs), such as payment apps and online marketplaces. A TPSO is generally required to file a 1099-K only when a payee's payments for goods or services are more than $20,000 and come from more than 200 transactions in a calendar year. That replaces the $600 threshold that had been scheduled to phase in.

A few points from the IRS FAQs:

  • The $20,000/200 threshold applies only to TPSOs. Payment card transactions have no minimum, so you can get a 1099-K for card payments of any amount.
  • A platform can still send you a 1099-K below the threshold.
  • Some states have lower reporting thresholds, so you might get a state-driven form even under the federal limit.

Either way, your own books, not the 1099-K, support your return.

Backup withholding and why W-9s matter now

When a payee doesn't give you a taxpayer identification number (TIN) in the required way, the backup withholding rules generally require you to withhold 24% from reportable payments until they do. The IRS also applied the higher $2,000 threshold to backup withholding on the payments it covers.

The simplest protection is a completed Form W-9 (Request for Taxpayer Identification Number and Certification) from each U.S. contractor or vendor, ideally before you pay them. A missing or incorrect TIN on an information return can also lead to penalties.

What to do in November and December

  1. Pull a 2026 vendor payment report from your bookkeeping system and total each payee for the year.
  2. Flag anyone at or near $2,000 and anyone you paid for legal services.
  3. Separate out card and payment-app payments, since those generally belong on the processor's 1099-K.
  4. Request missing W-9s now, while vendors are still responsive, instead of in the last week of January.
  5. Check names and TINs. They should match what's on each W-9, including for single-member LLCs, where the IRS instructions say the owner's name goes on the first name line.
  6. Decide how you'll e-file (see below), and set up access early.

January 2027 deadlines and e-filing

Form 1099-NEC is due to both the IRS and the recipient by January 31. When a due date falls on a weekend or legal holiday, it moves to the next business day. January 31, 2027 is a Sunday, so the practical deadline is Monday, February 1, 2027.

Form 1099-MISC generally goes to recipients by January 31 too (February 15 if you report amounts in box 8 or box 10). It's due to the IRS by February 28 on paper or March 31 if you file electronically, with the same weekend and holiday rule.

E-filing is required if you file 10 or more information returns in total. That count includes all information-return types together, such as 1099s and W-2s.

The IRS's old FIRE e-filing system is gone for this filing season. According to Publication 1099, the Information Returns Intake System (IRIS) is the only IRS intake system for information returns starting with tax year 2026 (the 2027 filing season). If you file through IRIS yourself, give yourself time to get access set up. If you use payroll or accounting software, confirm that it supports this season's filing.

The 2026 versions of Forms 1099-NEC and 1099-MISC also add new boxes for reporting cash tips and overtime under other provisions of the same law. If those apply to your business, review the updated instructions.

How TSW Core can help

Year-end reporting goes smoothly when your books are clean all year. TSW Core works with founders and small-business owners on bookkeeping, payroll, business tax, and year-end information returns, so your vendor records, W-9s, and filings are in order before January.

Book a call: a free 30-minute call to talk through your year-end filing needs.

This article is general information, not tax or legal advice. Rules depend on your specific facts, and IRS guidance can change. Talk with a qualified professional before acting on anything here.

Last updated: November 2026

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