Ideally, you’re working with a third-party payroll system to make things easier for your tech company. The right platform or service provider streamlines things for your W-2ed employees, including the required tax filings. If you’re working with contractors, your payroll setup might be able to accommodate those payments and tax filings, too.
In case that falls outside the jurisdiction there, though, we want to highlight some things you should know. Let’s go over when you need to send a contractor a 1099, what kind they get, and a few other things pertinent to your 2026 filings.
1099 101
A 1099 is the IRS’s contractor counterpart to a W-2. Basically, if you pay someone but they’re not an employee of your company, you probably need to issue a 1099. There are a few main forms of 1099s with which most tech companies engage.
1099-NEC
The 1099 most companies send is called a 1099-NEC. That NEC stands for non-employee compensation.
That’s what you’ll use for independent contractors, freelancers, attorneys, or any other individuals you pay money to who aren’t technically employed by your company. The threshold for 2025 is $600. If you pay any individual more than $599 for their services, you’re legally required to issue a 1099 to them.
There aren’t any major changes to the form for the 1099-NEC for 2025.
There is, however, one adjustment that any contractors you tip might ask about. The new “no tax on tips” ruling does protect some tips from getting taxed, but those tips still need to be reported on 1099s. It’s fairly rare for tech companies to tip contractors, but we wanted to highlight this in case it does come up.
In order to issue the 1099, you need to have an up-to-date W-9 form from the contractor.
How modern platforms affect 1099 issuance
Most of our tech clients use payroll/PEO services like Gusto, Justworks, or Rippling to pay their employees and contractors. These companies issue 1099s for payments over $600 made through their platform.
Any payments you make outside of your payroll/PEO platform won’t get this automatic issuance, though. We recommend that all tech companies review any additional vendors they paid via cash, check, wire transfer, and ACH during the year. This helps you pinpoint any additional 1099-NECs your company needs to get out.
We’ve seen that out-of-platform payments get particularly common for tech companies after a fundraising round (Seed, Series A, Series B, etc.). You might have made payments via BILL or large wire transfers to law firms, for example.
If you made payments through a different platform, check each company’s support pages to see if they process 1099s for applicable payments. More recently, we’ve seen companies like Ramp, Mercury, and Brex roll out bill-pay functionality.
If the platform won’t issue the 1099 or if you made the payment directly (e.g., via wire transfer), talk with our team so we can make sure you meet your 1099 issuance requirements.
1099-NEC filing deadlines
Typically, these 1099s are due to the recipient (i.e., the contractor, freelancer, etc.) and the IRS by the end of January. But since January 31 is a weekend in 2026, you have until February 2.
1099-MISC
As the “miscellaneous” implied by the name suggests, this is the catchall 1099. Your company uses it for non-service income you paid over $600.
Some of the most common reasons we see our tech clients needing to issue a 1099-MISC include:
- Paying rent to individuals (i.e., landlords) or property management companies that aren’t corporations
- Punitive damages (i.e., legal settlements)
- Gross proceeds paid to attorneys (i.e., their cut of settlements — you use the 1099-NEC for their attorney fees)
- Prizes or awards you paid out to non-employees
Our team can help you identify if there are any areas where your tech company needs to create and issue a 1099-MISC.
These have the same recipient deadline for 2026 of February 2. But the 1099-MISC isn’t due to the IRS until March 31 if you e-file (as most tech companies do).
1099-K
This is the 1099 the IRS requires for payments made through third-party platforms like Stripe, Square, and Venmo. The IRS calls these companies third-party settlement organizations (TSPOs).
The rules about these 1099s have been changing in recent years. The IRS had previously said it was going to phase in a $600 threshold here, making 1099-Ks similar to other 1099s. For the 2025 tax year, though, the thresholds are:
- Annual gross payments exceeding $20,000 and
- 200 transactions
Fortunately for you, the TSPO issues the 1099-K, not you. There is one thing you should note here, though.
We commonly see founders setting up TSPO accounts with their own Social Security Numbers in the early stages of their company. Those founders then end up receiving 1099-K forms that should have gone to their companies.
It’s extremely important to keep your TSPO accounts updated with your startup’s tax ID numbers so that these forms are issued to the correct entity. Otherwise, you could end up with tax notices for you or your co-founders.
Other 1099 tax info to note
We’ll leave you with a couple more pieces of intel to inform your handling of 1099s for the 2025 tax year:
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- 1099-DAs: If your company operates as a custodial broker of digital assets, you use this form to report cryptocurrency and non-fungible tokens (NFTs). You’re required to give payees their statements by February 15 in most cases. The 1099-DA is due to the IRS for any digital asset sale and exchange transactions by March 31.
- Sunsetting of FIRE: The IRS has plans to retire the system for Filing Information Returns Electronically (FIRE) at the end of 2026. If your company currently uses FIRE to submit 1099s to the IRS, now’s a great time to start familiarizing yourself with the Information Returns Intake System (IRIS). This will be the only intake system from 2027 on if all goes according to plan.
Have questions? Want help making sure you’re issuing the required 1099s by the deadlines? We’re here to help. To talk about all the 1099 to-dos for your specific tech company, contact our team of filing experts today.
Looking to stay one step ahead? Our 2026 tax guide breaks down what to expect and how to prepare. Download it here!
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