To generate a 1099, you need to collect taxpayer information from each payee, fill out the correct 1099 form with payment details, deliver copies to your payees by the January 31 deadline, and file copies with the IRS. The process is straightforward once you understand which form to use, what data you need, and how to submit everything on time.
Determine Which 1099 Form You Need
The 1099 is actually a family of forms, each covering a different type of payment. The two most common are the 1099-NEC (Nonemployee Compensation) and 1099-MISC (Miscellaneous Information). If you paid an independent contractor, freelancer, or other non-employee $600 or more during the tax year for services, you file a 1099-NEC. If you paid $600 or more in rent, prizes, awards, or other miscellaneous income, you use a 1099-MISC. Other variants cover interest (1099-INT), dividends (1099-DIV), and broker transactions (1099-B), among others.
Most small business owners searching for how to generate a 1099 are dealing with contractor payments, so the 1099-NEC is the form you’ll work with most often. The $600 threshold applies per payee, per year. If you paid a contractor $500 total across the year, you don’t need to file a 1099 for them. Payments made to corporations (C-corps and S-corps) are generally exempt, with exceptions for legal services and medical payments.
Collect Payee Information With Form W-9
Before you can generate a 1099, you need each payee’s legal name, business name (if different), address, and Taxpayer Identification Number (TIN). The TIN is either a Social Security Number for individuals or an Employer Identification Number for businesses. The standard way to collect all of this is by having each payee fill out IRS Form W-9, which asks for exactly the data you’ll need.
The best practice is to collect a W-9 before you make the first payment. If you wait until January to track down contractor information, you’ll be racing the deadline. Keep completed W-9s on file for at least four years. If a contractor refuses to provide a W-9, you’re required to withhold 24% of their payments as backup withholding and remit it to the IRS.
Choose How to Generate the Forms
You have several options for actually creating and filing your 1099s, ranging from free government tools to paid software and professional services.
IRS IRIS Portal (Free)
The IRS offers a free electronic filing system called the Information Returns Intake System (IRIS) Taxpayer Portal. It lets you manually enter payee data or upload it via a CSV file, e-file up to 100 returns at a time, and download payee copies for distribution. To use IRIS, you first need to apply for a five-digit IRIS Transmitter Control Code (TCC), which identifies your business when filing. Plan ahead, because the TCC application process can take several weeks.
Accounting Software
Most popular accounting platforms like QuickBooks, Xero, and FreshBooks either include 1099 generation or offer it as an add-on. These tools pull payment data directly from your records, auto-populate the forms, and handle electronic filing and payee delivery. This is often the most efficient option if you already track contractor payments in accounting software, since it reduces manual data entry and the errors that come with it.
Third-Party Filing Services
Online services such as Tax1099, Track1099, and eFile4Biz specialize in generating and filing information returns. You upload your payee data, the service creates the forms, e-files with the IRS, and mails or emails copies to your payees. Fees typically run $3 to $7 per form, depending on volume and delivery method.
Paper Filing
If you have fewer than 10 total information returns (including W-2s), you can still file on paper. You must use the official red-ink forms from the IRS, which you can order through their website, or purchase IRS-approved substitute forms from an office supply store. Printouts from a regular printer are not accepted for the copies you mail to the IRS, though you can print the recipient copies on plain paper.
Starting with tax year 2023, businesses filing 10 or more information returns in a year are required to file electronically. That 10-return threshold counts all your information returns combined, not just 1099s. If you file eight 1099-NECs and three W-2s, you’ve hit 11 and must e-file everything.
Key Deadlines to Follow
The 1099-NEC has a single deadline: January 31 of the year following the tax year. By that date, you must both furnish copies to your payees and file with the IRS. There is no automatic extension for the 1099-NEC.
The 1099-MISC has a split deadline. Recipient copies are due by January 31, but IRS filing is due by February 28 if filing on paper or March 31 if filing electronically. If a deadline falls on a weekend or holiday, it shifts to the next business day.
Missing these deadlines triggers penalties that escalate the longer you wait. For 2026 filings, the IRS charges $60 per form if you’re up to 30 days late, $130 per form if you’re 31 days late through August 1, and $340 per form if you file after August 1 or don’t file at all. If the IRS determines you intentionally disregarded the filing requirement, the penalty jumps to $680 per form with no maximum cap. These penalties apply separately to each form, so a business with 20 unfiled 1099s could face thousands of dollars in fines.
Step-by-Step Process
- Track payments throughout the year. Keep records of every payment to each non-employee. Your accounting software or a simple spreadsheet works. Note the payee name, TIN, and total amount paid.
- Verify your W-9 data in early January. Confirm you have a current W-9 for every payee who crossed the $600 threshold. Check that names and TINs match to avoid IRS notices.
- Fill out the 1099 forms. Enter your business information (name, address, EIN) as the payer. Enter each payee’s information and the total amount paid in the correct box. For the 1099-NEC, contractor compensation goes in Box 1.
- Distribute copies to payees by January 31. Each payee needs Copy B for their own tax return. You can mail it, deliver it in person, or send it electronically if the payee has consented to electronic delivery.
- File with the IRS by the deadline. Submit Copy A to the IRS along with Form 1096 (the transmittal summary) if filing on paper. If you e-file through IRIS or another electronic system, the 1096 is not required.
State Filing Requirements
Many states require you to file 1099s with them as well. The IRS offers a Combined Federal/State Filing Program that automatically forwards your electronically filed returns to participating states at no extra charge. This can save you from having to file separately with each state where your payees are located. Forms eligible for this program include the 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-R, and several others.
Some participating states require a separate notification that you’re using the combined filing program, so check your state’s requirements. States that don’t participate in the program will require you to file directly with their tax agency, often through their own portal. Most third-party filing services handle state filing as part of their package, though some charge an additional fee per state.
Correcting Mistakes
If you discover an error after filing, you can submit a corrected 1099 by checking the “CORRECTED” box at the top of a new form and filing it with the IRS. Common errors include wrong TINs, incorrect dollar amounts, or using the wrong form type. The sooner you correct a mistake, the less likely you are to face penalties. Through the IRIS portal, you can file corrections electronically using the same system you used for the original return.
If a payee gave you an incorrect TIN on their W-9, you’ll receive a B-notice from the IRS. You then have to solicit a new W-9 from the payee and, if they don’t respond, begin backup withholding at 24% on future payments until they provide the correct information.