# 1099-NEC

> The form a business sends an independent contractor. The threshold jumps from $600 to $2,000 for 2026 payments — but the income is taxable either way.

Category: self-employment-and-taxes
Updated: 2026-05-26
Canonical: https://everylastmile.app/glossary/1099-nec

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**Form 1099-NEC, Nonemployee Compensation**, is the IRS information return a business files when it pays $X or more in a calendar year to a nonemployee — an independent contractor, freelancer, gig worker, consultant, or board member.

**The threshold change.** Until 2025, businesses had to issue a 1099-NEC for payments of **$600 or more**. **OBBBA §70433** amended IRC §6041(a) and §6041A(a)(2) to raise that threshold to **$2,000 for payments made on or after January 1, 2026**. Starting in 2027 the $2,000 figure indexes for inflation.

**The rule that does not change: income is still taxable.** Under **IRC §61(a)**, gross income includes "all income from whatever source derived." If you earn $1,500 driving for a delivery platform in 2026 and never receive a 1099, that $1,500 is still income, still reported on Schedule C, and still subject to self-employment tax. The threshold change governs whether the _payer_ must file paperwork — not whether the _earner_ owes tax. This is the single most misunderstood change of OBBBA.

**1099-NEC vs. 1099-K.** 1099-NEC is issued by _businesses_ paying contractors directly. 1099-K is issued by _third-party settlement organizations_ (PayPal, Venmo, Stripe, Etsy, eBay, Cash App for business). OBBBA §70432 separately restored the 1099-K threshold to the original **$20,000 _and_ 200 transactions** — retroactive to 2022. The two thresholds are independent; you can get either, both, or neither for the same income.

**What's on the form.** Box 1: nonemployee compensation (the big number). The form goes to you and to the IRS, generally by January 31.

**Worked example.** Nina drives for a regional grocery-delivery app in 2026 and earns $1,850 in app payments plus $400 in customer tips processed by the app. Because the total ($2,250) crosses the $2,000 NEC threshold, she will likely receive a 1099-NEC. Her tax situation:

- Report $2,250 on Schedule C line 1
- Deduct business miles at the standard rate
- Pay SE tax on the net
- File whether or not she receives the form

If Nina had earned only $1,950, she would receive no 1099 — and would owe exactly the same tax.