2025 Form 1099 Filing Season: Key Deadlines and Updates

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2025 Form 1099 Filing Season: Key Deadlines and Updates

Client Deadline: Friday, January 16, 2026

To ensure timely filing with the IRS by the January 31st deadline, all 1099 information must be submitted to our office no later than Friday, January 16, 2026.

As we approach year-end, now is the time to begin preparing for 1099 reporting. We encourage clients to review their books for independent contractors or vendors who may require a Form 1099 and to confirm that a Form W-9 is on file for each applicable payee. Completing this step early helps prevent delays and ensures an efficient filing process in January.

Our team is here to help ensure your 1099s and other information returns are filed accurately and on time.

If you would like Smith Leonard to assist in the filing of your Form 1099s for 2025, please download the 1099 Preparation Template and upload it to our Secure Citrix ShareFile site no later than January 16th. (If the 1099 Preparation Template does not download automatically, you will need to download/save it to your computer before working on it in Excel.)

Note: For security purposes, we respectfully request that you DO NOT send us any 1099 information via email.

All links included in this information:

FAQ

How do I know which 1099 to issue?

Form 1099-NEC (Non-Employee Compensation) – Reports payments of $600 or more made to non-employees for services. Typically used for independent contractors, freelancers, consultants, attorney fees, accounting fees, and commissions.

Form 1099-MISC (Miscellaneous Information) – Reports other types of payments not related to services. Typically used for rent payments, prizes, awards, and medical payments.

Form 1099-K (Payment Card and Third-Party Network Transactions) – Reports payments processed through third-party payment platforms or merchant processors. This form is filed by the third party platform. For example, Venmo and PayPal are required to issue the 1099-K, not you.

If you are unsure which 1099 to file, please reach out to your Smith Leonard engagement team for assistance.

Note: The IRS imposes a penalty on taxpayers who fail to file correct information returns (Form 1099/1096) with the IRS. There is also an additional penalty for failure to provide the payee with a correct copy of the information return.

Who should receive a 1099?

Any individual or unincorporated business (sole proprietor, partnership, or LLC taxed as such) that you paid $600 or more for services during the year. Exceptions apply for corporations, though certain payments (like attorney fees) are still reportable even if the payee is incorporated.

What’s the difference between Form 1099-NEC and 1099-MISC?

Use Form 1099-NEC to report payments for services (nonemployee compensation). Use Form 1099-MISC for other types of payments such as rent, prizes, awards, or gross proceeds paid to attorneys.

Do I need to issue a 1099 if I paid someone through PayPal, Venmo, or a credit card?

No. Payments made through third-party platforms are reported by the platform on Form 1099-K. You only issue a 1099-NEC if you paid the contractor directly (cash, check, ACH, etc).

What information do I need to prepare my 1099s?

You will need:

The contractor’s name, address, and tax identification number (TIN or SSN) from a Form W-9
The total amount paid throughout the year
A completed 1099 filing template sent securely to your team at Smith Leonard

What happens if I don’t have a W-9 for a contractor?

You should request one immediately. If you are unable to obtain a W-9 you will be responsible for paying their income tax withholding to the IRS.

Do I need to issue a 1099 to my attorney or accountant (aka Smith Leonard)?

Yes, legal and accounting fees are reportable, even if the firm is incorporated.

Do I send a 1099 to a landlord or property manager for rent?

Yes, if you paid $600 or more in rent directly to the landlord or property owner. Payments to a property management company may be exempt if they are a corporation.

What’s the penalty for filing late or incorrectly?

Penalties range from $60 to $310 per form, depending on how late the filing is, with higher penalties for intentional disregard.

Who should not receive a 1099?

Payments to governments or corporations (including a limited liability company (LLC) that is treated as a C or S corporation), except for medical, health care, or law corporations. Payments for merchandise, telegrams, telephone, freight, storage, and similar charges are also not required. Payments made by credit card or through a payment processor (PayPal, Square, Stripe, Venmo, etc.) are also not required to be reported on Form 1099-NEC or 1099-MISC. However, see more regarding changes to the 1099-K reporting below.

Am I required to send 1099s, and if so, to whom?

Any entity or individual engaged in a trade or business that makes certain payments of $600 or more during the calendar year, must file applicable 1099s. This includes payments made for rent, director’s fees, prizes and awards, medical and health care payments, attorney fees, labor, commissions, and other outside services. Payments of interest, royalties, or dividends of $10 or more by entities other than individuals will also require the filing of a 1099.

Payments for which a Form 1099 is not required include payments to governments or a corporation (including a limited liability company (LLC) that is treated as a C or S corporation), except for medical, health care, or law corporations. Payments for merchandise, telegrams, telephone, freight, storage, and similar charges are also not required. Payments made by credit card or through a payment processor (PayPal, Square, Stripe, Venmo, etc.) are also not required to be reported on Form 1099. However, see more regarding changes to the 1099-K reporting below.

Smith Leonard can help you with your 1099 and other information return filing requirements. If you would like Smith Leonard to assist in the filing of your Form 1099s for 2025, please download the 1099 Preparation Template and upload it to our Secure Citrix ShareFile site no later than January 16th. (If the 1099 Preparation Template does not download automatically, you will need to download/save it to your computer before working on it in Excel.)

Note: For security purposes, we respectfully request that you DO NOT send us any 1099 information via email.

Helpful Hints & Information

Review your vendor information and Forms W-9

When your business sets up a new vendor, the process should start by receiving the vendor’s W-9 before making any payments. The W-9 form requires vendors to disclose whether they are set up to do business as an individual or some other type of entity (including whether they are a corporation, for which a 1099 form will generally not be required), in addition to their address and taxpayer identification number (TIN).The W-9 forms are used to prepare Form 1099s and to avoid backup withholding issues. People or entities that have not furnished their correct tax identification number (TIN) to you are subject to backup withholding at 24%. Caution: During some IRS audits, the IRS has assessed backup withholding even if the taxpayer identification number (TIN) was later obtained. Therefore, we highly recommend reviewing your vendor files to make sure you have a W-9 form on file for every vendor you have paid for the calendar year, and if not, request them now! It’s also a good policy for your business to have each vendor fill out a new W-9 form every year or two, as they can change. Form W-9 can be downloaded from the IRS here.

Rental real estate activities & the importance of Form 1099

The IRS has taken the position that if you take the 20% QBI deduction for your rental real estate activities, you should also be filing any required Form 1099s. Located in the Final 199A Regulations, the IRS states: “Taxpayers should consider the appropriateness of treating a rental activity as a trade or business for purposes of Section 199A where the taxpayer does not comply with the information return filing requires under Section 6041.” Failure to comply with 1099 filing requirements could result in the IRS denying the QBI deduction – a severe penalty indeed! So, it is critical to determine whether your rental activities rise to the level of a trade or business, and if so, that you file Form 1099s when required.

Form W-4 and Employee Information Review

Now is also the perfect time for employees to verify their I-9 or W-4 information. It is important that you have accurate names, social security numbers, and addresses on file for your employees before preparing their 2024 W-2 forms. Note: The IRS may charge employers a penalty for each return or W-2 form that has a missing or incorrect SSN or Federal identification number. Please have your employees review their information for any changes or corrections as soon as possible.

The newest Form W-4 will be released later in 2025 for the 2026 tax year. Only current employees who would like to change their W-4 withholdings, those who filed as tax-exempt in 2025, and new hires will need to submit the new form.

Reminder Regarding North Carolina’s Non-resident Contractor Income Tax Withholding Rules

A payer must deduct and withhold 4% North Carolina income tax from nonwage compensation paid to a “payee” if the payer expects to pay more than $1,500 to the payee in that calendar year. Under the law, a payee is any of the following: a) a nonresident contractor (individuals or entities), b) An ITIN contractor (including those who have applied for an ITIN or have an expired ITIN), c) a person that fails to provide the payer with a taxpayer identification number (TIN), OR d) A person that fails to provide the payer a valid taxpayer identification number (TIN), subject to notification from the Department of Revenue that the TIN is invalid. There are certain exceptions to the new withholding rules. For example, tax is not required to be withheld from compensation paid to a non-resident entity if the entity is a corporation or limited liability company that has obtained a certificate of authority from the North Carolina Secretary of State. However, the payer must obtain from the entity, and retain in its records, the entity’s identification number issued by the North Carolina Secretary of State. 

Note: The law imposes personal liability on responsible personnel for unpaid income taxes required to be withheld by the business.