New thresholds, new boxes, and a brand-new e-filing system. Here’s what AP needs to know before the 2027 filing season.
It’s late September, which means it’s that time again: hunt down the missing taxpayer identification numbers in your vendor master file and get a plan in place to collect and verify them before year-end. Same drill as always.
But this year isn’t the usual “a box moved, a title changed” kind of update. For tax year 2026 (the forms you’ll file in early 2027), the IRS and Congress have handed AP teams three big changes at once: a long-awaited higher reporting threshold, redesigned 1099-NEC and 1099-MISC forms, and the retirement of the IRS’s decades-old FIRE e-filing system. Any one of these would be worth a memo. All three together? Grab a coffee.
1. The $600 Rule Is Finally Dead (Mostly)
For about seventy years, $600 was the magic number. Pay a contractor $600 or more in a year and you owed them a 1099. The One Big Beautiful Bill Act, signed July 4, 2025, changed that. For payments made on or after January 1, 2026, the general reporting threshold for Forms 1099-NEC and 1099-MISC jumps to $2,000. Starting with 2027 payments, that number gets indexed for inflation in $100 increments, so it’ll creep upward from here.
A few things to keep straight:
- It’s based on when you paid, not when you file. The 1099s you filed back in January 2026 for 2025 payments still used the $600 rule. The $2,000 threshold kicks in for 2026 payments, reported in early 2027.
- Not everything moved. Gross proceeds paid to attorneys (think settlements, in Box 10 of the 1099-MISC) stay at $600. Royalties keep their $10 floor. So don’t just find-and-replace “600” with “2,000” in your system.
- Backup withholding follows the new threshold. The $2,000 floor applies to backup withholding obligations too, which is a nice bit of relief for small-dollar vendors with TIN problems.
- Remember, states can do their own thing. Some states still require reporting at $600. If you file in multiple states, check each one before you set your rules.
Also note, the 1099-K threshold for payment apps and card processors is back to $20,000 and more than 200 transactions, retroactive to 2022.
Here’s the quick-reference version:
| Payment type | 2026 threshold | What changed |
| Nonemployee comp (1099-NEC Box 1a) | $2,000 | Up from $600; indexed for inflation starting 2027 |
| Rents, prizes, other income, medical payments (1099-MISC) | $2,000 | Up from $600 |
| Gross proceeds to attorneys (1099-MISC Box 10) | $600 | No change |
| Royalties | $10 | No change |
| Direct sales for resale (1099-NEC Box 2 / MISC Box 7) | $5,000 | No change |
| Third-party network payments (1099-K) | $20,000 and 200+ transactions | Back to the old rule, retroactive to 2022 |
2. You Still Need Those W-9s from Everybody
It’s tempting to think, “Great, fewer 1099s, so I can stop chasing W-9s from the little guys.” Don’t. You can’t know in March which vendor is going to cross $2,000 by December. That $400 one-off job in February has a funny way of turning into a $5,000 relationship by fall.
The smart move is the same as it’s always been. Collect a W-9 before the first payment and verify the name/TIN combination through IRS TIN Matching up front. Remember, too, that the threshold only changes how many forms go out. It doesn’t change anyone’s tax obligation, and it doesn’t change worker classification. Misclassification risk is still where it was.
3. 1099 Forms Makeover
The IRS has released December 2026 revisions of both forms, and yes, the boxes moved around. Most of the changes are there to support the new “no tax on tips” and “no tax on overtime” deductions.
Form 1099-NEC
- Box 1 is now Box 1a. Nonemployee compensation still goes here, just with a new label.
- Box 1b: cash tips.
- Box 1c: Treasury Tipped Occupation Code (TTOC). You can enter up to two codes, and “000” means the tips don’t qualify for the deduction.
- Box 1d: qualified overtime compensation. That’s just the premium portion, the “half” in time-and-a-half, not the whole overtime amount.
- Box 3 now gets excess golden parachute payments, which used to live on the 1099-MISC.
Form 1099-MISC
- Box 13a: cash tips. Box 13b: TTOC. Box 14: overtime compensation.
- Golden parachutes are gone from this form (see above), and several later boxes, including the state fields, shift down by one.
- The HFA Hardest Hit Fund exception has been dropped. If you relied on it, check how any remaining payments should be treated now.
An important point: the new tip and overtime boxes are a breakdown, not an add-on. Those amounts are already included in the main compensation box. They’re broken out separately so the recipient can figure their deduction.
On both forms, the payer name-and-address block has been split into separate fields. That’s a small thing, but if your vendor master stores addresses as one big blob of text, your 1099 software is going to have opinions about it.
And some things you’ll recognize from years past have not changed. Payments for fish purchased for resale still go in Box 11 of the 1099-MISC, direct sales of $5,000 or more for resale can still be flagged on either form, and attorney fees for services to your organization still go on the 1099-NEC, while settlement proceeds go on the 1099-MISC.
4. The E-File Mandate Hasn’t Gone Anywhere
Quick reminder: if you file 10 or more information returns in a calendar year, counting all types combined (1099s, W-2s, and so on), you must file them electronically. So, for most AP departments, “we’ll just do them on paper” left the building a couple of years ago. Now it also means IRIS. Also, FIRE is done; you must use the IRIS system—see From FIRE to IRIS: What AP Needs to Do.
6. Deadlines for the 2027 Filing Season
The deadlines themselves haven’t changed but watch the calendar. January 31, 2027, falls on a Sunday, so the 1099-NEC is due to both the IRS and recipients on Monday, February 1, 2027. The 1099-MISC is due to the IRS by March 1, 2027, on paper (since February 28 is also a Sunday) or March 31, 2027, if filed electronically. Recipient copies of the 1099-MISC are generally due February 1, except for amounts in Box 8 or Box 10, which get until February 15.
A Pre-Season Checklist
- Scrub the vendor master for missing or mismatched TINs and classifications and run them through TIN Matching.
- Update threshold logic in your AP and 1099 systems to $2,000, with $600 kept for attorney gross proceeds and $10 for royalties.
- Check each state you file in for its own threshold.
- Map the new boxes (1a through 1d on the NEC; 13a, 13b, and 14 on the MISC) and move golden parachute reporting to the NEC.
- Figure out whether you have any tip or overtime payments to contractors that need to be broken out.
- Get your IRIS TCC now if you file directly or confirm your software vendor is IRIS-ready if you don’t.
- Split payee names and addresses into separate fields so IRIS doesn’t reject them.
As always, check the IRS’s Instructions for Forms 1099-MISC and 1099-NEC and the E-file Information Returns with IRIS page on IRS.gov for the latest.
And if you want help with vendor onboarding, including TIN collection and verification, contact us. That’s one part of 1099 season we can take off your plate.