How do I handle 1099s for the freelancers I subcontract?
When you work with freelance editors, designers, developers, or other contractors, you take on a reporting obligation. The IRS wants to know who you paid and how much, and that means filing 1099-NEC forms for qualifying payments.
Collect a completed W-9 from every freelancer before you send the first payment. The W-9 gives you their legal name, address, taxpayer identification number, and business type. You need this information to file their 1099 later, and chasing contractors down in January when you’re up against the deadline is frustrating and often unsuccessful. Make the W-9 part of your onboarding process so you don’t have to scramble at year end.
Track payments per freelancer throughout the year in your accounting software. Don’t lump contractor payments into a generic expense category. Record each payment and assign it to the specific person. When the year ends, you need to know exactly how much you paid each individual. Good small business bookkeeping services keep your records organized so pulling the numbers at 1099 time is straightforward.
Know the thresholds. Starting with 2026 payments, the federal 1099-NEC threshold increases to $2,000. This is higher than the previous $600 amount. But Massachusetts still requires state reporting at $600, so if you’re a Massachusetts business, you may need to file state forms even when the federal threshold isn’t met. Keep that in mind if you’re paying freelancers amounts between $600 and $2,000.
Don’t double-report payments made through cards or platforms. If you pay a freelancer by credit card, debit card, or through a platform like PayPal or Venmo for business, the payment processor reports those amounts on a 1099-K instead. You don’t file a 1099-NEC for those payments because they’re already reported. Only payments by check, ACH, cash, or wire transfer go on your 1099-NEC.
1099-NEC forms are due to both the recipient and the IRS by January 31 of the following year. Miss the deadline and penalties start accumulating. Getting W-9s upfront and tracking payments all year makes hitting this deadline manageable.
If keeping track of freelancer payments and filing requirements sounds like more than you want to handle, 1099 preparation takes this off your plate. We track who needs a form, gather the information, and file on time so you stay compliant. If you have questions about your specific situation, reach out for a consultation.
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