Every year around January, we start getting the same question from our small business clients: “I paid a contractor last year — do I need to file a 1099, and how do I actually do it?” The answer to the first part is almost always yes. The answer to the second part is easier than most people think, but the details matter — and getting them wrong can mean penalties, delayed filings, or a notice from the IRS that nobody wants to open.

This guide is designed to walk you through the entire process of filing 1099 forms directly with the IRS. Whether you paid one freelance designer or a dozen subcontractors, you can handle this yourself using free IRS tools. We’ll cover who needs to file, which form to use, the deadlines you cannot miss, and the step-by-step mechanics of getting it done.

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Do You Need to File a 1099?

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The basic rule is straightforward. If your business paid $600 or more to a non-employee for services during the calendar year, you are required to report that payment to the IRS on a Form 1099-NEC and provide a copy to the person you paid. This applies to independent contractors, freelancers, consultants, subcontractors, and attorneys — essentially anyone who performed work for your business and is not on your payroll.

There are four conditions the IRS looks at: you made the payment to someone who is not your employee, the payment was for services performed in the course of your trade or business, the payment went to an individual, partnership, estate, or in some cases a corporation, and the total payments to that person reached $600 or more during the year. If all four are true, you file.

A few important exceptions. You generally do not need to issue a 1099 for payments made to C corporations or S corporations — with one notable exception. Payments to attorneys must always be reported on a 1099, even if the law firm is incorporated. Payments made through third-party payment processors like PayPal, Venmo, or credit card networks are reported separately on Form 1099-K by the processor, not by you. And personal payments — hiring someone to paint your house, for example — are not reportable. This is a business obligation, not a personal one.

An important change ahead: For payments made in 2025, the reporting threshold remains $600. However, beginning with the 2026 tax year, the One Big Beautiful Bill Act raises the threshold for Form 1099-NEC and 1099-MISC to $2,000. That means for payments you make starting January 1, 2026, you won’t need to file a 1099 unless total payments to that individual exceed $2,000. Keep in mind that contractors are still responsible for reporting all their income regardless of whether they receive a 1099, and you should still maintain accurate records of every payment.

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Form 1099-NEC vs. Form 1099-MISC — Which One Do You Use?

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This is where clients often get confused, so let’s keep it simple. If you paid someone for services — labor, consulting, freelance work, subcontracting — you use Form 1099-NEC (Nonemployee Compensation). This is the form that replaced the old Box 7 on Form 1099-MISC starting in tax year 2020, and it is now the standard form for reporting contractor payments.

You use Form 1099-MISC (Miscellaneous Information) for other types of payments made in the course of business: rent paid to a landlord ($600 or more), royalties ($10 or more), prizes and awards, medical and healthcare payments, and certain payments to attorneys for gross proceeds from legal settlements. If you are a typical small business owner paying contractors, the 1099-NEC is almost certainly what you need.

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The W-9 — Get This Before You Pay Anyone

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Before you can file a 1099, you need the contractor’s correct legal name, address, and taxpayer identification number — either a Social Security Number or an Employer Identification Number. The way you collect this is by having the contractor complete a Form W-9 before you make your first payment.

This is the single most important step you can take to make 1099 filing painless, and it is the step most small businesses skip. If you wait until January to request a W-9 from a contractor you paid back in March, you may find that contractor has moved, changed their phone number, or simply does not respond. Now you are stuck: you know you owe a 1099, you have the payment records to prove it, but you do not have the TIN you need to file it. The IRS does not accept “I couldn’t reach them” as an excuse.

Our recommendation: Make it a policy. No W-9, no payment. Collect the form at the start of every contractor relationship and keep it on file. It takes two minutes and saves hours of frustration at year-end.

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Filing Online with the IRS IRIS Taxpayer Portal — The Recommended Method

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The IRS now provides a free, web-based system called IRIS — the Information Returns Intake System — that allows any business to file 1099 forms electronically at no cost. No special software is required. No paid third-party service is necessary. You log in, enter the information, and submit. For small businesses and individuals filing a handful of 1099s, this is by far the easiest and most cost-effective method.

The IRIS Taxpayer Portal supports all forms in the 1099 series, including 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-R, and many others. It also supports Forms 1098 and 1042-S. You can enter information manually for each form or upload data using a CSV template the IRS provides — which is helpful if you have more than a few to file.

Here is the step-by-step process:

Step 1: Set up your IRIS account. Go to irs.gov/iris and create an account. You will need to authenticate through ID.me, which requires identity verification. You will also need to apply for an IRIS-specific Transmitter Control Code (TCC). This is different from the old FIRE system TCC — even if you have filed electronically before, you need a new one for IRIS. The TCC approval process can take up to 45 days, so do not wait until the week before the filing deadline to set this up.

Step 2: Gather your information. For each contractor, you will need the data from their W-9: legal name, address, TIN (SSN or EIN), and the total amount you paid them during the tax year. Have your own business EIN and contact information ready as well.

Step 3: Enter the 1099 data. Log into the IRIS Taxpayer Portal, select the form type (1099-NEC for contractor payments), and enter the payer and recipient information along with the payment amount. The system provides real-time validation and will flag common errors like missing fields or formatting issues before you submit.

Step 4: Submit to the IRS. Once you have reviewed and confirmed the information, submit the form electronically. IRIS will provide a confirmation — typically within 48 hours — that the IRS received your filing.

Step 5: Provide copies to the recipient. Filing with the IRS is only half of your obligation. You must also furnish Copy B of the 1099 to the contractor. You can print the completed form directly from the IRIS portal and mail it, or you can deliver it electronically if the recipient has consented to electronic delivery. The recipient copy is due by the same deadline as the IRS filing.

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Can You Still File on Paper?

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Yes, but with significant limitations. If you are filing fewer than 10 total information returns for the year — and that count includes all types combined, not just 1099s — you may file on paper. However, paper filing comes with requirements that catch people off guard.

You must use the official IRS Copy A form, which is printed in a special red ink that allows for machine scanning. You cannot print a PDF from the IRS website and submit it — the IRS will reject it. These official forms must be ordered from the IRS (they are free, but you need to request them in advance) or purchased from an authorized supplier. Each paper filing must be accompanied by Form 1096, which serves as a transmittal summary of all the 1099 forms you are mailing together.

The paper filing deadline for most 1099 forms is March 2, 2026 (for tax year 2025), while the electronic filing deadline is March 31, 2026. The exception is Form 1099-NEC, which has a single deadline of February 2, 2026, regardless of whether you file on paper or electronically.

Our practical advice: Unless you are filing just one or two forms and are already comfortable with the paper process, use IRIS. It is faster, free, reduces errors, and gives you a confirmation of receipt. Most of our clients who try IRIS for the first time tell us they wish they had switched sooner.

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Key Deadlines You Cannot Miss

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Form 1099-NEC (contractor payments): Due February 2, 2026, to both the IRS and the recipient. This is a firm deadline — the IRS does not grant automatic extensions for this form. The usual date is January 31, but because that falls on a Saturday in 2026, the deadline moves to Monday, February 2.

All other 1099 forms (1099-MISC, 1099-INT, 1099-DIV, etc.): Recipient copies are generally due by February 2, 2026. The IRS filing deadline is March 2, 2026, for paper filers and March 31, 2026, for electronic filers.

Penalties for late filing are real and escalate quickly. If you file within 30 days of the deadline, the penalty is $60 per form. File after 30 days but before August 1 and it increases to $130 per form. After August 1 or if you do not file at all, the penalty jumps to $340 per form. For intentional disregard of the filing requirement, there is no cap — penalties can exceed $630 per form. For a business that pays a dozen contractors, even moderate delays can result in thousands of dollars in penalties.

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The 10-or-More Rule — When E-Filing Becomes Mandatory

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If you are required to file 10 or more information returns during the calendar year, you must file them electronically. This threshold is calculated by aggregating all types of information returns together — 1099-NEC, 1099-MISC, 1099-INT, W-2G, 1098, and any others. So if you file six 1099-NECs and four W-2s, that is 10 total, and electronic filing is mandatory.

This rule has been in effect since January 2024, when the IRS lowered the threshold from 250 to 10. It is the reason we encourage every small business to get set up on IRIS now, even if you only have a few forms to file. The threshold is low enough that most active businesses will cross it.

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The FIRE-to-IRIS Transition — What It Means Going Forward

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If you have been filing 1099 forms electronically for years, you may have used the IRS’s FIRE system (Filing Information Returns Electronically). That system is being retired. The 2025 tax year is the last year FIRE will accept filings, and the system will shut down entirely by the end of 2026. Starting with 2026 tax year filings (due in early 2027), IRIS will be the only electronic filing option.

The important thing to know is that your FIRE Transmitter Control Code does not carry over to IRIS. You will need a new, IRIS-specific TCC. If you have been using FIRE and have not yet set up an IRIS account, now is the time. The registration and TCC approval process takes time, and you do not want to be scrambling when filing deadlines arrive.

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A Real-World Example — Filing a 1099-NEC Through IRIS

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Let’s say you own a small consulting firm in San Diego. During 2025, you hired a graphic designer as an independent contractor and paid her $4,200 over the course of the year for various projects. You collected her W-9 at the start of the engagement — she provided her legal name, address, and Social Security Number.

In January 2026, you log into the IRIS Taxpayer Portal at irs.gov/iris. You select Form 1099-NEC, enter your business information as the payer, enter the designer’s information as the recipient, and report $4,200 in Box 1 (Nonemployee Compensation). You review the form for accuracy and submit it electronically. Within 48 hours, you receive confirmation that the IRS has accepted your filing.

Next, you print Copy B from IRIS and mail it to the designer — or, if she previously consented to electronic delivery, you email it. Both the IRS filing and the recipient copy are handled before the February 2 deadline. The whole process takes about 15 minutes.

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Common Mistakes We See — And How to Avoid Them

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Not collecting W-9s upfront. This is the number one issue. By the time January rolls around, contractors have moved on and may not respond promptly. Collect the W-9 before you issue the first payment.

Using the wrong form. Contractor payments go on 1099-NEC. Rent, royalties, and other miscellaneous payments go on 1099-MISC. Mixing them up creates headaches for everyone, including the recipient who has to reconcile what was reported.

Missing the deadline. The 1099-NEC deadline is earlier than most other information returns, and the IRS does not grant automatic extensions. Mark February 2 on your calendar and treat it as firm.

Trying to paper-file a printed PDF. The IRS will not process Copy A forms that are printed from a downloaded PDF. The official red-ink scannable forms must be ordered or purchased separately. If you do not have the official forms, file electronically through IRIS instead.

Forgetting to furnish the recipient copy. Filing with the IRS alone is not sufficient. The contractor must receive their copy by the same deadline. Failure to furnish can trigger separate penalties.

Ignoring state filing requirements. California participates in the IRS Combined Federal/State Filing Program, which means the IRS generally forwards your 1099 data to the state for you. However, if your state data differs from the federal submission, or if you have contractors in states that require separate filings, you may need to file directly with those state agencies as well.

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When to Call Us

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Filing a few straightforward 1099-NECs through IRIS is something most small business owners can handle on their own, and we encourage our clients to learn the process. But there are situations where professional guidance makes a difference. If you are unsure whether a particular payment requires a 1099, if you have contractors in multiple states with different filing obligations, if you need to file corrected returns for prior years, or if you have fallen behind on 1099 filings and are trying to get back into compliance — those are the conversations where we can help.

We also see clients who have received a CP2100 or CP2100A notice from the IRS indicating a name-TIN mismatch on a previously filed 1099. These notices require a specific response, and handling them correctly the first time avoids a cascade of follow-up correspondence.

San Diego Tax Associates helps small business clients stay compliant with their information return obligations year-round — not just during filing season. If you have questions about which 1099 forms to file, how to use IRIS, or how the new $2,000 threshold affects your reporting for 2026, we are here to walk you through it.

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