Form 1099 filing changes under the new $2,000 threshold

Tax professionals have a significant change in information reporting to discuss with clients for 2026. The longstanding $600 threshold for certain payments reported on Forms 1099-NEC, Nonemployee Compensation, and 1099-MISC, Miscellaneous Information, has increased to $2,000 for payments made after Dec. 31, 2025.

While the higher threshold may reduce the number of information returns some clients need to file, it doesn’t mean tax pros or their clients can simply replace $600 with $2,000 across the board.

What changed for Forms 1099-NEC and 1099-MISC?

Beginning with payments made in 2026, the federal information reporting threshold under §§6041 and 6041A increased from $600 to $2,000 for certain payments.

For Form 1099-NEC, this generally means a business must file the form when it pays $2,000 or more during the year for services performed by someone who is not its employee, assuming the payment is otherwise reportable.

The higher threshold also applies to several common Form 1099-MISC categories. These include rents, prizes and awards, other income payments, medical and health care payments, and certain other reportable payments.

For payment categories subject to the new $2,000 threshold, the threshold is measured by the aggregate amount paid to the same recipient during the calendar year. The $2,000 threshold does not apply to every Form 1099-MISC or Form 1099-NEC payment. For example, a client who makes four $600 payments to the same independent contractor during 2026 has paid that contractor $2,400. Assuming the other reporting requirements are satisfied, the client must file a Form 1099-NEC.

Not every Form 1099 threshold is now $2,000

One of the most important messages for clients is that the new threshold does not apply uniformly to every payment reported on Forms 1099-MISC and 1099-NEC.

Royalties, for example, generally remain reportable at $10 or more. Certain fishing-related payments also have separate reporting requirements.

Attorney payments deserve particular attention because the applicable threshold depends on what is being paid. Attorneys’ fees of $2,000 or more paid in the course of a trade or business are typically reported as nonemployee compensation on Form 1099-NEC under §6041A.

Gross proceeds paid to an attorney are different. Under the draft 2026 Form 1099-MISC instructions, gross proceeds of $600 or more paid to an attorney in connection with legal services, but not for the attorney’s services, are reported in Box 10 of Form 1099-MISC under §6045(f).

That distinction is an important one for tax pros to discuss with clients. A blanket statement that “the Form 1099 threshold increased to $2,000” could lead a client to miss a reporting obligation that remains subject to a different threshold.

Should clients still collect Form W-9?

A higher reporting threshold may lead some clients to question whether they still need to collect Form W-9, Request for Taxpayer Identification Number and Certification, from vendors expected to receive less than $2,000.

When a vendor relationship begins, the client may not know how much it will pay that vendor by year-end. A contractor expected to perform $1,000 of work in January could ultimately receive several thousand dollars as additional projects arise.

Waiting until the reporting threshold is reached to request Form W-9 can create problems during the information return season. Vendors may be difficult to locate, taxpayer identification numbers may be missing and entity classifications may need to be resolved as filing deadlines approach.

NOTE: A Form 1099-MISC or Form 1099-NEC generally must be filed for a payment from which federal income tax was withheld under the backup-withholding rules, regardless of whether the payment is below the ordinary reporting threshold. The backup-withholding rate is generally 24%.

Help clients update their systems, not their recordkeeping standards

Encourage clients to review their accounting and accounts payable systems. Software or internal processes configured to flag payments once they reach $600 will need to be updated for applicable 2026 payments.

At the same time, clients shouldn’t stop tracking payments simply because individual transactions are below $2,000. Don’t forget to distinguish among payment types because not every Form 1099-MISC category follows the same rule.

Remind clients that no Form 1099 doesn’t mean no taxable income

A recipient who receives less than $2,000 and does not receive a Form 1099-NEC or Form 1099-MISC may incorrectly assume the income isn’t taxable. The information reporting threshold determines whether the payer generally must issue a form; it does not determine whether the recipient must include otherwise taxable income on a federal tax return.

Start the conversation before filing season

The increase from $600 to $2,000 should reduce some information reporting obligations, but it also creates opportunities for misunderstanding. Tax pros can help clients prepare by reviewing which payments qualify for the higher threshold, identifying exceptions, updating accounting procedures and continuing to collect reliable vendor information.

Good records remain the foundation for determining whether a reporting requirement exists and preparing accurate information returns. By addressing the new Form 1099 thresholds during 2026, NATP members can help business clients adjust their procedures, avoid missed filings and approach the next information return season with greater confidence.