1099 and W-9 compliance

Who is reportable, how amounts are accumulated, the year-end sequence, and how to fix a filing that has already gone out.

ReferenceFor Bookkeepers, Business owners, Firm staff

Who is reportable

In broad terms, a 1099-NEC is required for payments of $600 or more during the calendar year, for services, made in the course of your trade or business, to a payee who is not a corporation.

Payee or payment	Generally reportable?
Individual or sole proprietor providing services	Yes
Partnership or LLC taxed as a partnership	Yes
Corporation	No — with exceptions
Attorney or law firm	Yes, even if incorporated
Payments for goods or merchandise only	No
Rent paid to a landlord	Yes — reported on 1099-MISC, not NEC
Paid by credit card or a third-party network	No — the processor reports it on 1099-K
Employees	No — that is a W-2

How amounts accumulate

1099 amounts are based on payments made during the calendar year, not on bills entered. A bill dated in December but paid in January belongs to the following year's 1099.

The compliance screen accumulates payments per vendor for the year and flags who crosses the threshold, who is missing tax identity, and who is flagged as reportable without a classification.

The year-end sequence

1
In November, review vendors missing tax identity.
Send portal onboarding links then, while there is time. December is too late and January is a crisis.
2
In early January, review the reportable list.
Check the classification of anyone near the threshold, and anyone whose payments look wrong.
3
Verify totals against the vendor's own records where the relationship warrants it.
A disagreement discovered before filing is a conversation; after filing it is a correction.
4
Generate and review the forms.
5
Distribute to recipients and file with the IRS by the deadline.
1099-NEC is due to both recipients and the IRS by January 31. Other forms have different dates — check the current year.
6
Retain copies.
File them in Document Storage with the year's other tax records.

Fixing a filed 1099

If a filed form is wrong, file a corrected one and give the recipient a copy. Do not wait for the IRS to raise it — a voluntary correction is a much better position than a discovered error.

Common causes and their fixes:

Wrong amount — usually a payment coded to the wrong vendor. Fix the coding, then file a correction.
Wrong tax ID — get a fresh W-9 and file a correction.
Duplicate vendor records — merge them, then file one corrected form and void the extra.
Filed for a corporation in error — file a correction showing zero.

Common questions

A vendor will not provide a W-9.

You may be required to apply backup withholding on their payments, and you must still file, reporting what you know. Speak to your tax preparer — the exposure for not filing is generally larger than the awkwardness of the conversation.

Do I file 1099s for payments made through payroll?

No. Employees receive a W-2. Contractors paid through the payroll system receive a 1099 generated there, so check both surfaces to avoid double-reporting the same person.