3 Steps to a Stress-Free 1099 filing deadline
As we approach the end of the third quarter of 2025, we want to share some best practices to assist employers who file Form 1099-NEC. By following these three steps, you can have a less stressful time meeting the January 31st filing deadline and avoid penalties.
What is nonemployee compensation (NEC)?
If the following four conditions are met, you must generally report a payment as NEC.
- You made the payment to someone who is not your employee.
- You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations). The IRS describes services as fees, commissions, prizes and awards received by a nonemployee, and other forms of compensation for services performed for your trade or business by an individual who is not your employee.
- You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
- You made payments to the payee of at least $600 during the year.
The current federal 1099 reporting threshold for payments to vendors, contractors, and other recipients is $600 for payments made in 2025.
For payments made after December 31, 2025, the threshold increases to $2,000, with future adjustments for inflation. Note that payments made by credit card or through third-party settlement organizations (such as PayPal) are reported on Form 1099-K, which has a $20,000 and 200 transaction threshold for 2025 and beyond.
Who must file a Form 1099-NEC?
According to the IRS instruction sheet, page 7, for Form 1099-NEC (Nonemployee Compensation), a 1099-NEC should be filed for each person in the course of your business to whom you have paid the following during 2025:
At least $600 in:
- Services performed by someone who is not your employee (including parts and materials) or
- Payments to an attorney”.
Three steps to a stress free 1099 filing deadline
To make the filing process easier, we recommend establishing a schedule to perform the following three steps, either mid-year or quarterly, depending on the number of vendors you have. However, you can perform these tasks at any time.
- Review your vendor list: identify any duplicate or inactive vendors
- For each current vendor, verify that you have: the correct legal company name, mailing address and Employer Identification Number (EIN) or Social Security Number (SSN)
- To ensure you receive the appropriate information for new vendors: no payment should be issued until you receive a completed Form W-9 from the vendor.
Best Practice
Additionally, it is best practice to obtain a current phone number, email address and contact name for each vendor. This information will help you reach out more easily and collect any necessary information.
By keeping the vendor list updated, your business can file the 1099-NEC forms with minimal disruption to your regular workload while meeting the 1099-NEC deadline.
Keep in mind, 1099-NEC forms must be filed by January 31 of each year.
As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.
DISCLAIMER: All communications by Wouch, Maloney & Co., LLP intend to provide general information, as of the date of the communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
