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1099-NEC vs 1099-MISC: Which Form Each Vendor Payment Goes On
Last updated: November 3, 2026 · Independent guide · We do not sell rankings or coverage.
The 1099 NEC vs 1099 MISC decision turns on what the payment was for. Fees for services performed by someone who is not your employee, including attorneys’ fees, go in box 1a of Form 1099-NEC once a payee reaches $2,000 for the year. Rents, royalties, prizes, medical and health care payments and gross proceeds paid to an attorney go in specific boxes of Form 1099-MISC, each with its own threshold. Below, each common payment type is mapped to its form and box for 2026 payments, along with how QuickBooks Online, NetSuite and Sage Intacct assign the box.
The rule in brief
- Who it applies to: businesses, nonprofits and government agencies paying in the course of a trade or business.
- Thresholds for 2026 payments: $2,000 for most boxes. Royalties stay at $10 and attorney gross proceeds at $600.
- Key dates for 2026 forms: 1099-NEC to recipients and the IRS by February 1, 2027. 1099-MISC to recipients by February 1, 2027, and to the IRS by March 31, 2027 if e-filed.
- Form changes: nonemployee compensation moves to box 1a on the December 2026 Form 1099-NEC.
- Official source: IRS Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026), dated June 25, 2026. We checked the rule on November 3, 2026.
Which form and box each vendor payment goes on
Thresholds apply per payee for the calendar year. The IRS says the $2,000 figure applies for tax years beginning after 2025 and may be adjusted for inflation beginning in 2027.
| Payment type | Form and box | Threshold (2026 payments) | AP notes |
|---|---|---|---|
| Services by contractors, consultants, freelancers | 1099-NEC, box 1a | $2,000 | Include parts and materials when they are incidental to the service. |
| Attorneys’ fees for legal services to you | 1099-NEC, box 1a | $2,000 | Reportable even when the law firm is a corporation. |
| Gross proceeds paid to an attorney (for example, a settlement check) | 1099-MISC, box 10 | $600 | Not a fee for the attorney’s services. Corporations are not exempt. |
| Rent for office space or machines | 1099-MISC, box 1 | $2,000 | Not required when paid to a real estate agent or property manager. |
| Machine rental that includes an operator | Split: 1099-MISC box 1 and 1099-NEC box 1a | $2,000 each | Prorate between the machine rent and the operator’s charge. |
| Royalties (patents, copyrights, trademarks, mineral rights) | 1099-MISC, box 2 | $10 | Report gross royalties, before a publisher’s fees, commissions or expenses or a mineral property’s severance taxes. |
| Prizes and awards not for services | 1099-MISC, box 3 | $2,000 | Prizes for services, such as a top-seller award to a nonemployee, go in 1099-NEC box 1a. |
| Medical and health care payments | 1099-MISC, box 6 | $2,000 | Includes professional corporations. Pharmacies for prescription drugs and tax-exempt hospitals are excluded. |
| Backup withholding on any of the above | Box 4 of the form that carries the payment | Any amount | A form is required whenever you withheld, regardless of the payment total. |
What each form requires in detail
Form 1099-NEC: payments for services
The IRS treats a payment as nonemployee compensation when you paid a nonemployee for services in the course of your business, the payee is an individual, partnership, estate or in some cases a corporation, and the total reached $2,000. Box 1a covers fees, commissions, referral fees, expert witness payments and travel reimbursements the contractor did not account for.
The IRS defines “attorney” to include a law firm, and legal fees go in box 1a whether or not the firm is incorporated.
Form 1099-MISC: everything that is not a service fee
Box 10 of Form 1099-MISC covers payments to an attorney in connection with legal services but not for the attorney’s own services, such as a settlement paid through the claimant’s lawyer. The rule applies even when both names are on one check.
Illustration. You pay outside counsel $14,000 in fees in 2026 and send the same firm a $90,000 settlement check for a former customer. The $14,000 goes on a 1099-NEC, box 1a. The $90,000 goes on a 1099-MISC, box 10. If the settlement includes taxable damages, the claimant also gets a 1099-MISC, generally in box 3. These figures are illustrative.
New boxes on the December 2026 revisions
On Form 1099-NEC, nonemployee compensation moves from box 1 to box 1a, with new boxes 1b (cash tips), 1c (tipped occupation code) and 1d (overtime). On Form 1099-MISC, boxes 1, 2, 3, 6 and 10 keep their numbers and boxes 13a, 13b and 14 were added, according to the Form 1099-MISC (Rev. December 2026).
A box list that still shows “NEC box 1” reflects the April 2025 revision, so ask your filing provider how its export maps to the new layout.
Who and what is exempt
The IRS instructions exclude these payments:
- Payments to corporations, including LLCs taxed as corporations, with exceptions that include attorney and medical payments.
- Payments for merchandise, telephone, freight, storage and similar items.
- Rent paid to a real estate agent or property manager.
- Card and third-party network payments, which are reported on Form 1099-K.
- Employee wages, which go on Form W-2.
Deadlines and penalties
The statutory dates come from the IRS instructions and Publication 1099 (2026), dated March 19, 2026. A date that falls on a weekend or legal holiday moves to the next business day, and the right-hand column applies that rule to 2027.
| Filing | Statutory date | Date for 2026 forms |
|---|---|---|
| 1099-NEC to recipients and IRS | January 31 | February 1, 2027 (January 31 is a Sunday) |
| 1099-MISC to recipients | January 31 | February 1, 2027 |
| 1099-MISC to recipients with box 8 or 10 amounts | February 15 | February 16, 2027 (February 15 is Washington’s Birthday, a federal holiday) |
| 1099-MISC to IRS on paper | February 28 | March 1, 2027 (February 28 is a Sunday) |
| 1099-MISC to IRS electronically | March 31 | March 31, 2027 |
You must e-file if you have 10 or more information returns of all types combined. Form 8809 gives an automatic 30-day filing extension for Form 1099-MISC, but none is available for Form 1099-NEC.
For information returns due in 2027, the IRS lists penalties of $60 per return if you file correctly within 30 days, $130 if you file by August 1, $340 after August 1 or if you never file, and $690 per return for intentional disregard (IRS, last reviewed October 30, 2026). Publication 1099 applies the penalty to incorrect information and wrong TINs, and a separate penalty covers incorrect payee statements.
Records you must keep
Publication 1099 tells payers to keep copies of filed information returns, or the ability to reconstruct the data, for at least 3 years from the due date, and for 4 years if federal income tax, including backup withholding, was withheld. Keep the W-9, payment detail by box, reclassification entries and filing confirmation. If a vendor does not provide a TIN, you backup withhold at 24%. Our guide to vendor onboarding software covers W-9 collection and TIN checks at setup.
What to set up in your systems
QuickBooks Online and NetSuite assign the box through the expense account. Sage Intacct stores a default form and box on the vendor. That difference decides how you fix a miscoded payment.
QuickBooks Online
Intuit’s help article on creating and filing 1099s (updated October 20, 2026) says you tag 1099 vendors and map each expense account to a box. An account you toggle off does not appear on the 1099, and card, PayPal and Venmo payments are excluded automatically. Intuit’s chart of accounts article (updated October 15, 2026) says you need dedicated accounts for 1099-MISC and 1099-NEC, plus separate accounts for tips or overtime.
To fix a miscoding, run the 1099 Transaction Detail Report, recategorize the payments to the right account by editing them or by journal entry, and rerun the report. Intuit’s payment categories article (updated August 3, 2026) still shows the April 2025 numbering, with 1099-NEC box 1.
Oracle NetSuite
NetSuite’s help center says you mark each contractor as 1099 Eligible on the Financial subtab of the vendor record (Oracle, no date shown), then go to Lists > Accounting > Accounts and set the 1099-MISC Category field on each Expense or Other Expense account (Oracle, no date shown). NetSuite’s help says it does not support 1099-MISC forms and describes exporting the 1099 Vendor Payment Report saved search to a provider such as Sovos or Avalara (Oracle, no date shown).
Because the category sits on the account, a bill coded to an account that mixes services and rent reports the wrong box. You fix it by recoding the bill lines or splitting the account. RSM, whose NetSuite consultants work on client implementations, describes the same setup (RSM, January 30, 2025, updated August 10, 2026). Our NetSuite saved search guide covers filtering searches.
Sage Intacct
Under Accounts Payable > All > Vendors, the Additional information tab has a Form 1099 link that opens a Form name and Default 1099 box, and each transaction line is tagged with a form and box (Sage, last modified October 23, 2026). When you change a vendor’s default, Intacct offers to update that vendor’s tagged transactions for the current year, or the current and prior year.
For bulk fixes, the import at Company > Setup > Configuration > Import data updates form and box by vendor and date range. It does not update imported bills marked Paid or transactions tagged manually (Sage, last modified October 23, 2026). A single default box does not fit a law firm that receives both fees and settlement proceeds, so tag those lines separately. Sage’s 1099 FAQ recommends partner TaxBandits for e-filing.
A pre-filing check for any system
- Run a 1099 detail report by vendor and box in early December, not in January.
- Filter for law firms and medical providers, which stay reportable as corporations.
- Confirm card payments are excluded and W-9 data is complete. Our article on vendor master data management covers keeping vendor tax fields clean.
If you already filed the wrong form
Publication 1099 treats a return filed on the wrong form type as an Error Type 2, which takes two returns. You file a corrected original with zero in every money amount, then file the correct form as a new original.
How we researched this
We read the December 2026 IRS instructions and forms, the April 2025 instructions, Publication 1099 (2026) and the IRS penalty page, then the current 1099 help pages from Intuit, Oracle and Sage. We also reviewed the top-ranking explainers from Tipalti, Paychex and OnPay. We checked every source on November 3, 2026.
Related guides
- NetSuite 1099 Reporting: Setup, Categories and Filing
- Best AP Automation for NetSuite: Native vs Third-Party
Frequently asked questions
Do I use 1099-NEC or 1099-MISC for attorney fees?
Fees you pay a lawyer for legal services to your business go in box 1a of Form 1099-NEC once they reach $2,000 for the year. Settlement money or other gross proceeds paid to an attorney, where the payment is not for the attorney’s services, go in box 10 of Form 1099-MISC at $600.
Is the 1099 threshold $600 or $2,000 for 2026?
For payments in 2026, reported in early 2027, the threshold is $2,000 for nonemployee compensation, rents, prizes, other income and medical payments. Royalties stay at $10 and attorney gross proceeds at $600. Forms for 2025 payments used $600.
Does rent go on 1099-NEC or 1099-MISC?
Rent goes in box 1 of Form 1099-MISC at $2,000 or more. Rent paid to a property manager is not reportable by you. If a rental includes an operator, split the charge between MISC box 1 and NEC box 1a.
Do I send a 1099 to a corporation?
Generally no. The main exceptions for AP teams are attorneys’ fees, gross proceeds paid to attorneys and medical and health care payments, which are reportable even when the payee is a corporation.
What happens if I put a payment in the wrong box?
Publication 1099 says the penalty for failing to file correct returns applies when a return includes incorrect information. Before filing, recode the account or vendor tag. After filing, file a corrected return with zero amounts and a new original on the correct form.
Sources
- IRS, Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026), June 25, 2026. irs.gov
- IRS, Form 1099-MISC (Rev. December 2026), created May 26, 2026. irs.gov
- IRS, Form 1099-NEC (Rev. December 2026), created May 26, 2026. irs.gov
- IRS, Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025), December 20, 2024. irs.gov
- IRS, Publication 1099 (2026), General Instructions for Certain Information Returns, March 19, 2026. irs.gov
- IRS, Information return penalties, last reviewed October 30, 2026. irs.gov
- Intuit (sells QuickBooks), Create and file 1099s with QuickBooks Online, updated October 20, 2026. quickbooks.intuit.com
- Intuit, Modify your chart of accounts if you file 1099-MISC and 1099-NEC, updated October 15, 2026. quickbooks.intuit.com
- Intuit, Understand payment categories for the 1099-MISC and 1099-NEC, updated August 3, 2026. quickbooks.intuit.com
- Oracle (sells NetSuite), Vendor Records for 1099 Contractors, no date shown. docs.oracle.com
- Oracle, Associating an Expense Account with 1099-MISC Categories, no date shown. docs.oracle.com
- Oracle, Form 1099-MISC (NetSuite 1099 Vendor Payment Report), no date shown. docs.oracle.com
- RSM (NetSuite consultant), 1099 reporting process in NetSuite, January 30, 2025, updated August 10, 2026. technologyblog.rsmus.com
- Sage (sells Sage Intacct), Set up 1099 vendor information, last modified October 23, 2026. intacct.com
- Sage, 1099 FAQs, last modified October 23, 2026. intacct.com
- Sage, Update existing vendor 1099 transactions with an import file, last modified October 23, 2026. intacct.com
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
