Yes, the Internal Revenue Service provides certain exemptions for filing 1099 forms for freelance workers. Familiarize yourself with the exceptions before you hire a contractor.
Do not submit 1099 forms if you:
- Make payments to corporations. Do not send Form 1099-NEC or other 1099 forms when you make a payment to a corporation. The same principle applies to LLCs and partnerships with an S or C corporation classification. The exemption does not apply when it comes to a law firm that you paid and must send a 1099-MISC.
- Accept rent payments through a real estate agent. Your tenants should not expect any 1099 forms if they pay you rent through a real estate agent or a property manager. Use IRS Schedule E (Form 1040) to report the payments through these intermediaries.
- Make payments to a tax-exempt organization. Confirm that any organization that you do work with is tax-exempt before you assume so. A tax-exempt organization organizes and registers with the IRS before contributing charitable, religious, and/or scientific work.
For tax years after 2025, the reporting threshold for 1099-NEC and 1099-MISC forms will rise from $600 to $2,000. The IRS will adjust the minimum threshold to account for inflation starting in Calendar Year 2027.
People Also Ask
- Should small businesses use online 1099 software? – Using online 1099 software is both a preference and practicality-based choice. Certain online tools can be found in desktop 1099 software and be more affordable.
- Do accountants need a 1099 e-file service? – Accountants and small business owners both need a proactive approach to filing taxes if they run their accounting and payroll in-house. Using a 1099 e-file service helps anyone avoid rushing at the last minute, which can help accountants focus on other financial management tasks.
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