1099-NEC reports nonemployee compensation of $600 or more paid to contractors, freelancers, and service providers. 1099-MISC covers other miscellaneous payments (rent, royalties, prizes, legal settlements). 1099-NEC was reintroduced in 2020 after decades of reporting on 1099-MISC.
Prior to 2020, nonemployee compensation was reported in Box 7 of Form 1099-MISC. In 2020, the IRS restored Form 1099-NEC (Nonemployee Compensation) as a standalone form, separating contractor payment reporting from other miscellaneous income. The split was driven by filing deadline conflicts — Box 7 MISC required January 31 filing while other MISC boxes allowed later filing. 1099-NEC is required for payments of $600+ made to: contractors, freelancers, and independent service providers (individuals, partnerships, and LLCs taxed as disregarded entities or partnerships) for services in the course of your trade or business. Payments to S-corps and C-corps are generally exempt (except for legal/attorney fees, which are reportable regardless of entity type). 1099-MISC is still required for: rent payments ($600+), royalties ($10+), prizes and awards ($600+), crop insurance proceeds, medical and health care payments to physicians or other suppliers ($600+), and certain other miscellaneous payments. If you pay rent to a landlord who is a business entity (not a corporation), you likely need to file 1099-MISC. Both forms are due to the recipient by January 31 and to the IRS (1099-NEC) by January 31 as well. 1099-MISC is due to the IRS by February 28 (paper) or March 31 (electronic) when Box 7 is not involved. Failure to file results in penalties of $60–$310 per form depending on lateness — plus potential backup withholding obligations.
Generally no — payments to C-corps and S-corps are exempt from 1099-NEC reporting. The exception is attorney fees: legal fees paid to any attorney (including those at law firm corporations) must be reported on 1099-NEC regardless of entity type. When in doubt, collect a W-9 from every vendor before first payment.
1099-NEC: $600+ in a calendar year to any single contractor for services. 1099-MISC rent: $600+. 1099-MISC royalties: $10+. Below these thresholds, 1099 filing is not required — but the recipient still owes income tax on the payment.
1099-NEC to recipient AND to IRS: January 31. 1099-MISC to recipient: January 31. 1099-MISC to IRS: February 28 (paper) or March 31 (electronic). Electronic filing with the IRS is required if you file 10 or more information returns.
IRS penalties range from $60 per form (filed within 30 days late) to $310 per form (not filed by August 1 or intentional disregard). State penalties are separate. The bigger risk: if you pay a contractor $10,000 without filing 1099-NEC and the IRS audits, you may lose the deduction for that payment or trigger backup withholding requirements.