Filing 1099s is one of the most important year-end tax responsibilities for business owners. Missing a 1099, filing late, or filing incorrectly can lead to IRS penalties and problems during an audit.

This guide focuses specifically on 1099 filings. You will learn who must file, which form to use, how to file, key deadlines, and how to avoid common filing mistakes.

Understanding the difference between 1099 contractors and employees is critical under IRS classification rules in 2025.

What Is a 1099 and Why Filing Matters?

A 1099 is an IRS information return that reports payments made to non-employees. Filing 1099s allows the IRS to match income reported by contractors with payments reported by businesses.

If you deduct contractor expenses but fail to file required 1099s, the IRS may question or disallow those deductions.

Which 1099 Form to File?

Most businesses file:

1099-NEC

Used to report payments of 600 dollars or more made to independent contractors for services.

Other 1099 forms exist, but 1099-NEC is the primary filing requirement for service-based businesses.

Important Note on 1099-K vs 1099-NEC

Many business owners confuse Form 1099-NEC with Form 1099-K. While 1099-NEC reports payments you make to contractors, 1099-K reports payment transactions processed through third-party platforms such as payment apps and marketplaces.

For a detailed breakdown of the IRS 1099-K threshold rules, reporting requirements, and what changed for 2025, read our full guide here:

IRS 1099-K Threshold: What You Need to Know for Your 2025 Taxes

Who You Must File 1099s For?

You generally must file a 1099 if:

• You paid 600 dollars or more during the year

• The payment was for services

• The recipient is not your employee

• The recipient is not taxed as a C corporation

This includes freelancers, consultants, virtual assistants, and independent professionals.

Step by Step 1099 Filing Instructions

Step 1: Collect W-9 Forms

Obtain a completed W-9 from every contractor before filing. This provides the legal name, tax classification, and taxpayer ID required for filing.

Step 2: Review Total Payments

Confirm the total amount paid to each contractor during the year. Ensure amounts are accurate and properly categorized.

Step 3: Prepare the 1099-NEC

Complete the form using the contractor’s W-9 information and total payments.

Step 4: Send 1099s to Contractors

Contractors must receive their 1099 by January 31.

Step 5: File 1099s with the IRS

File electronically or by mail by January 31. Electronic filing is recommended for accuracy and tracking.

For official IRS instructions on Form 1099-NEC, filing methods, and deadlines, visit:
https://www.irs.gov/forms-pubs/about-form-1099-nec

When Do 1099s Need to Be Filed

The IRS deadline is January 31 for:

• Delivering 1099s to contractors

• Filing 1099s with the IRS

Missing this deadline can result in penalties.

How to File 1099s Online?

Business owners can file 1099s using:

• IRS approved e filing platforms

• Accounting software

• Payroll or bookkeeping systems

While software helps with submission, it does not confirm whether a 1099 is required or if worker classification is correct.

Common 1099 Filing Mistakes

• Filing the wrong 1099 form

• Missing contractors paid earlier in the year

• Using incorrect W-9 information

• Filing after the deadline

• Failing to file with both the IRS and the contractor

These mistakes often lead to penalties and IRS notices.

1099 Filing Penalties

Penalties depend on how late the filing is and can increase over time. Filing early and accurately reduces risk and stress.

Conclusion

1099 filing is a required compliance task that protects your deductions and keeps your business in good standing with the IRS. A simple process, followed consistently each year, can prevent penalties and audit issues.

If you are unsure whether you filed correctly or want help reviewing your 1099 filing process, proactive guidance matters.

Need help creating a compliant, customized 1099 filing process. Reach out to INVESTOR FRIENDLY CPA® for review, setup, and year end compliance support.

FAQs

When do 1099s need to be filed

January 31 with both contractors and the IRS.

What happens if I file 1099s late

Late filings can result in IRS penalties and notices.

Do I need to file 1099s for LLCs

Yes, unless the LLC is taxed as a C corporation.

Is a W-9 required to file a 1099

Yes. A W-9 provides the required filing information.

Can I file 1099s myself

Yes, but proper review ensures compliance and accuracy.

Need Help With 1099 Filing and Worker Classification?

At INVESTOR FRIENDLY CPA®, we help business owners file 1099s correctly, classify workers properly, and build systems that reduce IRS risk before problems start. Whether you are unsure who needs a 1099 or worried about filing errors, proactive guidance can protect your deductions and your business.

Call us today at (800) 522-6091 or schedule your FREE consultation call. Let’s make sure your 1099 filing and worker classification are done right.