Paying contractors: Form 1099-NEC, W-9 and W-8BEN
If your company pays freelancers or other businesses for services, the IRS wants to know about some of those payments. Which forms you need depends on whether the contractor is a US person.
US contractors: W-9, then 1099-NEC
Before the first payment, ask every US contractor for Form W-9. It gives you their legal name, tax classification and taxpayer ID.
After the year ends, file Form 1099-NEC for each US contractor you paid at least the threshold amount for services:
- for payments made in 2025 and earlier: $600;
- for payments made from January 1, 2026: $2,000, adjusted for inflation in later years.
Form 1099-NEC is due to the IRS and to the contractor by January 31. Payments to corporations are usually exempt, but payments to most LLCs and sole proprietors aren't.
Non-US contractors: W-8BEN
A contractor who isn't a US person and does all the work outside the US doesn't get a 1099. Collect Form W-8BEN (individuals) or W-8BEN-E (companies) before paying them and keep it on file. You don't send it to the IRS.
The W-8 shows why you didn't withhold US tax. If the contractor does work while physically in the US, different rules apply.
Contractor or employee?
If you control how, when and where someone works, they may legally be an employee, whatever the contract says. Employees need payroll and Form W-2, not a 1099.