Freelancer
What Is a 1099-NEC and What Do I Do With It? (2025 Guide)
By ClearTaxGuide · Updated May 2026 · 6 min read ✓ 2025 IRS figures
If you freelance or work as an independent contractor in the US, Form 1099-NEC is one of the most important tax documents you will encounter. Every January, clients who paid you $600 or more are required to send you this form. Here is exactly what it means and what to do with it.
1. What is Form 1099-NEC?
Form 1099-NEC stands for Nonemployee Compensation. It is the IRS form that businesses and clients use to report payments made to freelancers, independent contractors, and other self-employed individuals for services performed.
The "NEC" designation was reintroduced in 2020, separating contractor payments from the older Form 1099-MISC. If you do work for a client and they pay you for that work, a 1099-NEC is how the IRS finds out about it.
Simple version: A 1099-NEC is the freelancer's equivalent of the W-2 that employees receive. It tells both you and the IRS how much a client paid you during the year.
2. Who sends you a 1099-NEC?
Any business or individual that paid you for services in the course of their trade or business must send you a 1099-NEC if the total payments reached the reporting threshold. This includes:
- Companies that hired you as a contractor or freelancer
- Small business owners who paid you for services
- Platforms that pay you directly (not through a payment processor)
- Law firms, agencies, or individuals who paid for professional services
Corporations are generally exempt from receiving 1099-NEC forms — but there are exceptions, including payments for legal services regardless of the payee's structure.
3. The 2025 reporting threshold — and what's changing
| Tax year | 1099-NEC threshold | Notes |
|---|
| 2025 | $600 | Current threshold, unchanged |
| 2026 and beyond | $2,000 | Raised by the One Big Beautiful Bill Act (July 2025), then indexed for inflation |
Source: One Big Beautiful Bill Act (P.L. 119-21), Section 70433; IRS Instructions for Forms 1099-NEC (2025)
Important: Even though the threshold rises to $2,000 starting in 2026, all income is still taxable regardless of the threshold. If a client pays you $500 and does not send a 1099-NEC, you are still legally required to report that income on your tax return. The threshold only determines when clients must file — not what you must report.
You may not receive a 1099-NEC in several situations:
- The client paid you less than $600 total during the year
- The client paid you through PayPal, Venmo, or another payment processor (those platforms issue Form 1099-K separately)
- The client simply forgot to send it, or it was lost in the mail
In all cases, you are still required to report the income. Keep your own records of all payments received throughout the year — do not rely on 1099 forms as your only record of income.
Best practice: Track every client payment in a spreadsheet or accounting app as it arrives. By year-end, you will have a complete income record regardless of which 1099 forms actually arrive.
5. What to do when you receive a 1099-NEC
When a 1099-NEC arrives, follow these steps:
- Check Box 1 — this shows the total amount the client reported paying you during the year
- Verify the amount — cross-reference with your own payment records
- Check your name and SSN/EIN — errors here can cause IRS matching problems
- Report Box 1 on Schedule C — this is where freelance income goes on your tax return
- Keep the form — you do not attach it to your return, but keep it for at least three years
Key point: You do not mail or attach the 1099-NEC to your tax return. The IRS already received a copy directly from your client. You simply use the number to accurately fill in your Schedule C.
6. What to do if the amount is wrong
If the amount on Box 1 does not match your records, contact the client who issued the form as soon as possible. They can file a corrected 1099-NEC (Form 1099-NEC with the "Corrected" box checked). You should receive the corrected form before your filing deadline.
If the client will not correct an error, report the income amount you believe to be accurate based on your own records. Document your payment history in case the IRS ever asks about a discrepancy.
Deadline note: Clients must send 1099-NEC forms to recipients by January 31 each year. For 2025 income, the deadline is January 31, 2026. If you have not received a form you are expecting by mid-February, contact the client directly.
7. FAQ
Do I owe taxes on a 1099-NEC?
Yes. The income reported on a 1099-NEC is subject to both self-employment tax (15.3%) and federal income tax at your personal bracket rate. Use our free tax calculator to estimate what you will owe.
What is the difference between 1099-NEC and 1099-MISC?
Form 1099-NEC is specifically for nonemployee compensation — payments for services you performed. Form 1099-MISC covers other types of payments such as rents, prizes, and royalties. Since 2020, contractor payments moved off 1099-MISC and onto 1099-NEC.
What is the 1099-NEC threshold in 2025?
For payments made in 2025, the threshold is $600. Clients must file a 1099-NEC if they paid you $600 or more during the year. Starting in 2026, the One Big Beautiful Bill Act raises this threshold to $2,000.
Can I receive multiple 1099-NEC forms?
Yes. You will receive a separate 1099-NEC from each client who paid you $600 or more. If you worked with five qualifying clients, you will receive five forms. Report all of them on your Schedule C.