how to give 1099

Who You Actually Need to Give a 1099 To

Form 1099-NEC (Nonemployee Compensation) is for people or businesses you paid for services — not products, not employees. If you paid a U.S.-based freelancer, contractor, consultant, or agency $600 or more in a calendar year via check, ACH, cash, or app-based transfers not covered by a payment processor's own 1099-K, you're generally the one responsible for issuing the 1099.

This is common for sellers who scaled with outside help. As third-party sellers now account for more than half of the physical gross merchandise sold on Amazon, most of that volume is run by small teams leaning on contractors for listing optimization, customer service, and design — all 1099-NEC territory if paid directly.

Payments made by credit card, debit card, or through platforms like PayPal or Stripe are usually excluded from your 1099-NEC obligation, because the payment processor issues its own 1099-K to the contractor instead. Don't double-report.

The Actual Steps to Give a 1099

Giving a 1099 isn't complicated, but the sequence matters, especially the paperwork you should have collected before you ever cut the first check.

Follow these steps in order:

• •Collect a W-9 from every contractor before paying them — it gives you their legal name, entity type, and Taxpayer Identification Number.
• •Track total payments per contractor throughout the year in your bookkeeping software so you're not scrambling in January.
• •Confirm the $600 threshold was met per contractor for services (not goods) paid outside a card/app processor.
• •File Form 1099-NEC with the IRS — either through IRS FIRE, an approved e-file provider, or your payroll/accounting platform — by the January 31 deadline.
• •Send Copy B to the contractor by the same January 31 deadline, by mail or secure electronic delivery if they've consented.
• •Keep copies and W-9s for at least four years in case of an IRS inquiry.

1099-NEC vs. the 1099-K Amazon Might Send You

Sellers often confuse the 1099 they need to give with the 1099-K they receive. Amazon (and other marketplaces) issue you a 1099-K reporting your gross payment volume — that's about your income, not your contractor payments. It has no bearing on whether you need to issue a 1099-NEC to someone you hired.

The IRS 1099-K reporting threshold for platforms has been phased in over recent years rather than staying fixed at the old $20,000/200-transaction level, so more sellers are receiving 1099-Ks than in the past — check the current IRS threshold before assuming you're under it. Regardless of what threshold applies to you, your obligation to give a 1099-NEC to contractors is separate and based on what you paid out, not what you took in.

Keeping the two straight — and reconciling both against your books — is exactly the kind of task that gets messy without clean transaction history. This is where Amazon accounting software that syncs to QuickBooks & Xero earns its keep: it separates marketplace payouts, COGS, fees, and contractor disbursements automatically, so your 1099-K and 1099-NEC numbers don't get tangled at tax time.

Deadlines, Penalties, and Recordkeeping

Both the IRS copy and the recipient copy of Form 1099-NEC are due January 31 — there's no staggered deadline like older 1099 forms used to have. Miss it, and penalties scale with how late you are, from modest per-form fines if you're a few weeks late up to steeper penalties for intentional disregard.

State filing requirements vary too. Some states require you to separately submit 1099-NEC data even if you filed federally through combined reporting; verify your state's specific rules rather than assuming federal filing covers everything.

Good recordkeeping is what makes this painless. Track every contractor payment with a memo tagging the payee, keep signed W-9s on file, and reconcile your books monthly instead of once a year. Sellers who wait until January to figure out who they paid what almost always end up filing late or guessing.