Surprisingly, the answer is still no as of 2025. New employers need to think about 1099 filings and which of their transactions require annual reporting. Staying compliant as you make your digital payment records often requires a scalable system. You must submit Form 1099-NEC to report your payments of $600 or more in non-employee compensations.
Services performed that require you to submit Form 1099-MISC include:
- Awards
- Prizes
- Rents
There are exceptions for what employers must report and reporting your software subscriptions makes the cut, because software is a product rather than a service performed by someone. The Internal Revenue Services provides certain Form 1099 exemptions.
Aside from not reporting software subscriptions that you purchase, other exceptions include:
- Corporations
- Services and goods
- Tax-exempt organizations
Corporations – Employers generally do not submit a 1099 form when they make payments to a corporation. The exception includes an LLC that is regarded similarly to a C or S corporation.
Services and Goods – Do not send a 1099 form for your merchandise, utilities, subscriptions, storage, and similar services.
Tax-Exempt Organizations – Many nonprofit organizations and trusts are exempt from taxes.
The IRS outlines the specific circumstances that require employers to send Form 1099. Despite not needing to issue a 1099 for software subscriptions, utilizing affordable software is one of the most effective ways to ensure accuracy and compliance.
There is a less than 1% error rate for e-filed returns compared to 21% for paper returns.
In 2026, employers and other payors for tax year 2025 will not incur penalties from the Internal Revenue Service if they fail to submit a separate report that accounts for the total amount of:
- Qualified overtime compensation
- Reasonably designated cash tips
People Also Ask
- What is the difference between Forms 1099-NEC and 1099-MISC? – The IRS changed 1099 form requirements in 2020 for businesses who need to file for contracted workers. The IRS 1099-MISC form became one for businesses to report miscellaneous income.
- What is the penalty for submitting the wrong 1099 form? – Yes, but it is important to keep in mind that 1099 penalties are more severe if you do not send a corrected form as soon as you notice an error or are notified about one.
Our W-2/1099 Forms Filer supports W-2, W-3, and many 1099 forms with an easy-to-use, menu-driven format. Call our customer support team at (405) 340-0697 or explore our free 1099-etc Demo software today.