As a business owner, filing accurate and timely 1099 forms is essential for complying with IRS regulations. Deadlines arrive quickly at the start of each year, making early preparation vital. This guide—updated for the 2025 tax year (forms you’ll issue in early 2026)—walks you through who needs a 1099, how to gather the correct information, and actionable steps to avoid penalties. (Note: your bookkeeper may not automatically collect or file 1099s for you, so understanding this process is critical.)
Updated July 12, 2025
- 1. Importance of 1099 Filing for Businesses
- 2. Starting Early: Why Collecting W-9s Now Is Critical
- 3. Who Needs a 1099? — Detailed 2025 Checklist
- 4. Key Information Required for 1099 Filing
- 5. Important 1099 Deadlines for 2025 (Forms Due in 2026)
- 6. 1099 Filing Options: DIY vs. Working with a CPA
- 7. FAQs on 1099 Filing (2025 Edition)
- 8. Final Tips for Seamless 1099 Filing
- References
1. Importance of 1099 Filing for Businesses
1099 forms ensure that all income is reported and taxed appropriately. The IRS uses them to monitor payments to non-employees and vendors. Failure to comply can trigger fines, audits, or other penalties. Knowing which forms to file—and filing them on time—protects your company from IRS scrutiny and keeps operations compliant.
2. Starting Early: Why Collecting W-9s Now Is Critical
Collect W-9 forms from each vendor, contractor, and service provider before you issue the first payment. Early collection:
- Avoids last-minute scrambles in January.
- Reduces errors by letting you verify TINs early.
- Simplifies year-end prep because all payee data is already on file.
Best practice: Request a completed W-9 as soon as you engage a new payee.
3. Who Needs a 1099? — Detailed 2025 Checklist
| Scenario | Form to Issue | 2025 Threshold / Rule |
|---|---|---|
| Independent contractors & freelancers | 1099-NEC | ≥ $600 in services |
| Attorneys (services) | 1099-NEC | Any amount ≥ $600—even if incorporated |
| Attorneys (gross proceeds, settlements) | 1099-MISC | Any amount |
| Rent payments | 1099-MISC | ≥ $600 |
| Medical & health-care payments | 1099-MISC | ≥ $600 (includes corporations) |
| Royalties | 1099-MISC | ≥ $10 |
| Third-party payment networks (PayPal, Venmo, Stripe, etc.) | 1099-K | > $2,500 aggregate goods-&-services payments in 2025 (drops to $600 in 2026) |
| Digital-asset broker transactions (crypto, NFTs) | 1099-DA (NEW) | Broker must report gross proceeds for dispositions on or after Jan 1 2025 |
| Debt cancellation | 1099-C | ≥ $600 |
| Real-estate proceeds | 1099-S | All reportable transactions |
Common exceptions: Payments to most C-corps (except medical/legal), employee wages (W-2), and personal-expense payments.
4. Key Information Required for 1099 Filing
- W-9 data – Legal name, TIN, entity type, address.
- Payment totals – Track cumulative payments by recipient.
- Service description – Note if payments are for legal or medical services, rent, etc.
- Backup-withholding status – If a W-9 isn’t provided, withhold 24 % from future payments until received.
5. Important 1099 Deadlines for 2025 (Forms Due in 2026)
| 2026 Due Date | What’s Due |
|---|---|
| Mon Feb 2 2026(Jan 31 falls on Saturday) | Furnish copies and file with IRS for 1099-NEC and 1099-MISC (boxes 1-7) |
| Mon Mar 2 2026 | Paper filing deadline for all other 1099 series (e.g., 1099-MISC boxes 8–10, 1099-INT, 1099-K, 1099-DA) |
| Tue Mar 31 2026 | E-file deadline for all remaining 1099 forms |
| Tue Feb 17 2026 | Furnish recipient statements for 1099-B, 1099-DA, 1099-S, and 1099-MISC boxes 8 or 10 |
E-file mandate: If you file 10 or more information returns in total (W-2s, 1099s, 1098s, etc.), you must e-file.
6. 1099 Filing Options: DIY vs. Working with a CPA
DIY Options
- IRS IRIS – Free e-file portal (requires a Transmitter Control Code).
- Third-party platforms – Tools like Tax1099 offer bulk uploads, TIN verification, and secure storage.
CPA-Assisted Filing
- Reduces errors and penalty risk.
- Ensures you’re current on tax-law changes (e.g., new 1099-DA, $2,500 1099-K threshold).
- Provides support if the IRS questions your filings.
7. FAQs on 1099 Filing (2025 Edition)
Q1. What are the late-filing penalties for 2025 returns?
- $60 per form if filed within 30 days.
- $130 per form if filed Feb 3–Aug 1 2026.
- $340 per form if filed after Aug 1 2026 or not filed.
- $680 per form for intentional disregard. (Caps apply; smaller businesses have lower maximums.)
Q2. Do I have to e-file if I issue nine 1099-NECs and two W-2s?
Yes—those 11 information returns exceed the 10-form threshold.
Q3. How does the new 1099-K threshold affect me?
Payment platforms will send a 1099-K once your goods-&-services payments exceed $2,500 in 2025. It doesn’t change what’s taxable; use it to reconcile your income records.
Q4. What is Form 1099-DA?
It’s filed by brokers to report gross proceeds from digital-asset sales. If you traded crypto on a platform in 2025, expect to receive a 1099-DA in early 2026.
Q5. Can I still request an extension?
Use Form 8809 for a 30-day extension on most 1099s—but not for 1099-NEC, which has no automatic extension.
8. Final Tips for Seamless 1099 Filing
- Automate TIN-matching through the IRS portal.
- Segment digital-asset and TPSO payments in your books.
- Leverage IRIS if your accounting software can’t handle the 10-form e-file rule.
- Schedule reminders at least 30 days before each deadline.
- Consult a CPA for complex cases—backup withholding, multi-state filings, or IRS notices.
Conclusion
Preparing 1099 forms is a critical responsibility for every business owner. By identifying who needs a 1099, gathering information early, and selecting the right filing method, you’ll avoid penalties and keep your business compliant. Start now—your February 2026 deadlines will arrive faster than you think.
Need help? SDO CPA specializes in hassle-free 1099 season support. Click here to get started.
References
- IRS, General Instructions for Certain Information Returns, 2025.
https://www.irs.gov/instructions/i1099gi - IRS Notice 2024-85, Transition Relief for Form 1099-K (Nov 2024).
https://www.irs.gov/irb/2024-51_IRB#NOT-2024-85 - IRS News Release IR-2024-204, Draft Form 1099-DA Released (Sept 2024).
https://www.irs.gov/newsroom/irs-updates-draft-version-of-form-1099-da