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. 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.