Quick Answer: Start in October. Forms W-2 and 1099-NEC for 2026 are due to recipients and the IRS by February 1, 2027, since January 31 falls on a Sunday. The reporting threshold for most 1099-NEC and 1099-MISC payments rises from $600 to $2,000 for payments made in 2026, and the forms add new boxes for tips and overtime.
January is the busiest month of the year for small business owners, and it arrives fast. Employers and business owners who prepare in October and November spend January filing forms instead of hunting for missing information. Here is how to get ahead.
What changed for 1099s in 2026?
For the first time in decades, the dollar threshold has moved. For payments made on or after January 1, 2026, you generally file Form 1099-NEC or 1099-MISC only if you paid a person $2,000 or more during the year. The threshold will adjust with inflation starting in 2027. The Form 1099-K threshold also reverted to $20,000 and more than 200 transactions.
A higher threshold does not mean less paperwork upfront. You still need W-9s, accurate payment records, and a way to total what you paid each vendor. Payments made in 2025 still use the old $600 threshold, and state rules may differ.
What is new on W-2 and 1099 forms?
New federal deductions for qualified tips and overtime pay mean payroll and information returns now capture more detail. The 2026 Form 1099-NEC adds boxes for cash tips and overtime compensation, and W-2 reporting is being updated as well. Your payroll software must be set up to track tips and overtime premium pay correctly. Ask your provider whether updates are in place.
Why does October and November prep make January easier?
Because problems are cheaper to fix early. A missing W-9 in October is a quick email. A missing W-9 in late January is a delay, a possible backup withholding issue, and a filing you cannot finish. Early prep also gives you time to correct name and tax ID mismatches before they trigger IRS notices.
What should be on your checklist?
Work through these steps now:
- Collect a W-9 from every contractor and vendor you pay
- Run a year-to-date vendor payment report and compare totals to the $2,000 threshold
- Verify employee names, Social Security numbers, and addresses
- Confirm every worker is classified correctly
- Review how tips and overtime are coded in payroll
- Confirm your payroll provider has updated for the new reporting
- Plan to e-file if you have 10 or more information returns to submit
Which payments do not need a 1099?
Payments to corporations are generally exempt, as are payments for merchandise and most payments made by credit card or through a third-party network, which are reported on Form 1099-K instead. Wages paid to employees go on a W-2, not a 1099. Personal payments are not reportable. If you are unsure, collect the W-9 first and sort out the reporting with your CPA.
What worker classification issues are common in the Central Valley?
Seasonal crews, farm labor contractors, delivery drivers, construction subcontractors, and wellness or salon professionals are common problem areas. California applies a strict test, often called the ABC test, to decide whether someone is an independent contractor. Getting it wrong can mean back taxes, penalties, and wage claims. October is a good time to review each arrangement.
What if you find a problem after the forms go out?
Corrections are common and manageable. If you notice an error in a name, tax ID, or amount, file a corrected form as soon as possible. The sooner you fix it, the lower the risk of penalties. A short review before filing catches most of these mistakes.
Want your 1099 and W-2 filing done right? Contact DDC CPA today. We will help you get organized before the January rush.
Frequently Asked Questions
When are W-2s and 1099-NECs due in 2027?
Both are due to recipients and filed with the IRS or SSA by February 1, 2027, since January 31 falls on a Sunday.
Do I need to send a 1099 if I paid a contractor $1,500 in 2026?
Generally, no federal 1099-NEC is required below $2,000, unless you withheld federal income tax. Keep the records anyway, and check whether any state reporting rules apply.
Do I send a 1099 to an LLC?
It depends on how the LLC is taxed. Payments to LLCs taxed as sole proprietors or partnerships are usually reportable. Payments to corporations are generally not, with some exceptions.
What is the penalty for filing W-2s or 1099s late?
Penalties are charged per form and increase the longer you wait. Small errors add up when you have many forms, so preparing early is the best protection.
When should I start preparing for W-2 and 1099 season?
October or November is ideal. Starting early gives you time to collect W-9s, confirm employee information, and update payroll settings before the January deadline.