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The 1099-NEC reports what you paid people for services. The 1099-MISC reports almost everything else you paid out that is not for services, such as rent, royalties, prizes, and settlements. If your vendor did work for you, it is a 1099-NEC. If you paid them for the use of something, or paid them money that is not compensation for work, it is usually a 1099-MISC.
1099-NEC vs 1099-MISC at a glance
| Form 1099-NEC | Form 1099-MISC | |
|---|---|---|
| Reports | Nonemployee compensation, meaning payments for services | Nonservice income: rent, royalties, prizes, awards, settlements |
| Typical AP examples | Contractors, consultants, freelancers, independent repair crews | Office or equipment rent, license royalties, legal settlement proceeds |
| Main box | Box 1, nonemployee compensation | Box 1 rents, Box 2 royalties, Box 3 other income, Box 10 attorney proceeds |
| Deadline (2025 tax year) | February 2, 2026, to both the recipient and the IRS | Recipient by early February; IRS by March 2 on paper or March 31 if e-filed |
| Backup withholding shown in | Box 4 | Box 4 |
| Royalties threshold | Not applicable | $10 for royalties |
What is the difference between 1099-NEC and 1099-MISC?
The dividing line is services. Form 1099-NEC exists for one thing: money you paid to someone who is not your employee, in exchange for work they performed for your business. A consultant who redesigned your website, a contractor who fixed the roof, a freelance writer, an unincorporated cleaning service. All 1099-NEC.
Form 1099-MISC catches the payments that are reportable but are not compensation for work. The classic one for AP teams is rent: if you pay a landlord who is not a corporation, that goes in Box 1 of the 1099-MISC. Royalties go in Box 2. Prizes and awards, and other income payments that do not fit anywhere else, go in Box 3. Gross proceeds paid to an attorney, which is not the same as paying an attorney for legal services, go in Box 10.
The 1099-NEC is not new so much as revived. Nonemployee compensation used to sit in Box 7 of the 1099-MISC. The IRS split it back out into its own form starting with the 2020 tax year, mostly because the NEC deadline is earlier than the MISC deadline and cramming both onto one form made the filing calendar a mess.
Which form do I use for an attorney?
This is the question that catches the most AP teams, because the answer depends on what the money was for. Paying a law firm for legal services goes on the 1099-NEC, in Box 1, and it is reportable even if the firm is incorporated, which is one of the few exceptions to the general corporate exemption. Gross proceeds paid to an attorney, meaning money that passes through the attorney to a claimant as part of a settlement, goes on the 1099-MISC in Box 10.
Practical rule: fees for the lawyer's work are NEC. Settlement money the lawyer is holding on someone else's behalf is MISC Box 10. If the same firm gets both in a year, they get both forms.
The 2026 threshold change every AP team needs to know
For payments made on or after January 1, 2026, the reporting threshold for most 1099-NEC and 1099-MISC payments rose from $600 to $2,000 under the One Big Beautiful Bill Act. From 2027 the $2,000 figure gets indexed to inflation. That means the 1099s you file in early 2026 for the 2025 tax year still run on the old $600 rule, and the payments you are making right now, in 2026, are the first ones governed by $2,000.
Two things do not change, and both matter more than the threshold itself. First, the $10 threshold for royalties on the 1099-MISC stands. Second, and this is the one people get wrong: you should still collect a W-9 from every single vendor, regardless of how much you expect to pay them. The threshold is cumulative across the calendar year, so a vendor you expected to pay once for $800 and ended up paying four times is over the line, and if you have no W-9 you have both a reporting problem and a backup withholding problem. Our guide to W-9 vs 1099 covers how the two forms relate.
Do I send a 1099 to a corporation?
Usually no. Payments to C corporations and S corporations for ordinary services are generally not 1099-reportable. The exceptions are narrow but they bite: payments to attorneys, medical and healthcare payments, and a few specific categories such as fish purchases and certain federal payments are reportable regardless of corporate status.
The W-9 is how you know. The vendor checks their federal tax classification on the form, and that box is what decides whether they land in your 1099 run. This is another reason to treat the W-9 as mandatory at onboarding rather than as something you chase in January based on a spend report.
What are the 1099 deadlines?
The NEC deadline is the tight one. For the 2025 tax year, Form 1099-NEC is due to both the recipient and the IRS by February 2, 2026, with no extra time for e-filing. Form 1099-MISC gives you more room: recipient copies go out in early February, but the IRS copy is not due until March 2 on paper or March 31 if you file electronically.
Note the e-filing mandate as well. If you are filing ten or more information returns of any type in aggregate, you must file electronically. That threshold is low enough that most businesses with a real vendor file are captured by it.
Can you file both a 1099-NEC and a 1099-MISC for the same vendor?
Yes, and it is common. A vendor who consulted for you and also leased you warehouse space gets a 1099-NEC for the consulting fees and a 1099-MISC for the rent. The two forms report different kinds of income, so there is no double counting. What you must not do is dump a service payment into the 1099-MISC because it is easier, or lump rent into the NEC because the vendor is already there. The IRS matches these against the recipient's return, and mismatches generate notices.
How AP teams get 1099 season right
Every problem in January traces back to a decision made months earlier. The vendor was set up without a W-9. The payment was coded to a generic expense account, so nobody can tell whether it was rent or services. The vendor's legal name in the system is their trading name, so the TIN match fails. None of that is fixable in a two-week filing window.
The fix is upstream. Collect a signed W-9 before the vendor is payable, capture the federal tax classification and the 1099 box on the vendor record, and code payments consistently so the year-end report can separate services from rent without a person reading each line. Where forms and invoices arrive as PDFs, tools that read each document and pull the fields keep the vendor master accurate without manual keying. Then in January you run a report instead of an investigation.
Consistent coding is the other half, and it is where invoice coding software earns its keep: if every invoice from a vendor lands on the same GL account and carries the same 1099 flag, the year-end extract is trustworthy. Pair that with a clean vendor master from vendor onboarding software and 1099 season becomes a routine task rather than a fire drill.
Frequently asked questions
Is 1099-NEC the same as 1099-MISC?
No. The 1099-NEC reports nonemployee compensation, meaning payments for services performed by someone who is not your employee. The 1099-MISC reports other kinds of reportable income such as rent, royalties, prizes, and gross proceeds paid to attorneys. Nonemployee compensation used to sit in Box 7 of the 1099-MISC until the IRS split it out onto its own form for the 2020 tax year.
Who gets a 1099-NEC?
Any non-corporate US vendor you paid for services during the year above the reporting threshold: contractors, consultants, freelancers, and unincorporated service businesses. Attorneys get one for legal fees even when the firm is incorporated. Employees never get one; they get a W-2.
What happens if I use the wrong 1099 form?
You file a corrected return. The IRS matches the amounts on your 1099s against what the recipient reports, so a service payment reported as other income on a 1099-MISC can generate a mismatch notice for the vendor. Correct it as soon as you spot it rather than waiting for a notice, since penalties scale with how late the correction lands.
Do I need to send a 1099 for payments made by credit card?
No. Payments made by credit card, debit card, or through a third-party settlement network are reported by the card processor on Form 1099-K, not by you. Reporting them again on a 1099-NEC would double count the vendor's income. Only payments you made directly, by check or ACH, belong on your 1099s.