What changed with 1099 rules, and what do I file this January?
The $2,000 reporting threshold you may have heard about does not apply to what you file this January. For 1099-NEC forms covering payments made in 2025, the threshold is still $600. The higher threshold applies to payments made starting in 2026, so the first filings under the new rule happen in January 2027.
Here is the timeline in plain terms. This January, you file 1099-NEC forms for any contractor who received $600 or more from your business in 2025. That has not changed from previous years. Next January, when you file for 2026 payments, the federal threshold rises to $2,000. After that, the threshold will be indexed for inflation going forward.
There is an important wrinkle for businesses operating across state lines. Some states maintain their own 1099 reporting thresholds that are lower than the federal threshold. If you pay contractors in multiple states, do not assume the federal rules settle everything. California and several other states have their own requirements that may still trigger a filing even when the federal threshold is not met. Check the requirements in each state where you pay contractors, or have someone check for you.
Regardless of the threshold, collect a W-9 from every contractor before you make the first payment. The threshold determines when you file a 1099, not when you need their tax information. You cannot know in January whether a contractor will eventually cross the reporting threshold over the course of the year, and trying to collect a W-9 months later is frustrating. Get it upfront every time.
Bookkeeping for medical businesses keeps contractor payments properly categorized throughout the year. That makes 1099 preparation straightforward when January arrives instead of a scramble to figure out who got paid what.
If you work with independent providers, which is common in home care agencies, therapy practices, and med spas, the $600 threshold means most of your contractor payments probably require a 1099. 1099 preparation can take this off your plate if you are not sure what needs to be filed or simply want the filings handled for you.
These rules are current as of this writing and should be verified with the IRS or your accountant before filing. If you want help getting your 1099s filed correctly this January, reach out to book a consultation.
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