Distribute 1099-NEC forms for your contractors

When you pay contractors for work, you may need to file a 1099-NEC form. This ensures compliance with IRS rules and helps contractors report their income.

When you need to file

This applies to most contract work, like consulting, cleaning, or repairs.

• File a 1099-NEC if you pay a contractor $600 or more in a calendar year.
  • Starting in 2026 (forms filed January 2027), the threshold increases to $2,000
• Always give a copy to the contractor and file with the IRS.

Key takeaway: If you pay $600 or more for services, you typically must file.

Who gets a 1099-NEC

You must file for:

• Individuals (sole proprietors)
• Partnerships
• LLCs taxed as individuals or partnerships
• Attorneys (even if they are a corporation)
• Medical and healthcare providers

You do not need to file for:

• C-corporations
• S-corporations

What payment to report

Report:

• Services (work done for your business)
• Commissions
• Fees
• Prizes or awards for services

Do not report:

• Goods or products
• Payments to corporations (unless its for attorneys or healthcare)

Filing deadlines

• Give contractors their 1099-NEC by January 31.
• File with the IRS by January 31—Gusto files 1099s on your behalf.

State rules

Most states follow the federal $600 rule. Some states (like Vermont) may require a 1099-NEC for any amount if you withhold state tax.

Always confirm your state’s rules—contact the state directly if needed.

Payments less than $600

You do not have to file for payments under $600.

You can still file if you want to help contractors prove their income and keep records clean.

Summary table

Gusto can mail your Forms 1099-NEC and corrected Forms 1099-NEC (if applicable) directly to your contractors for just $5 per person—mailing fees will be added to your monthly invoice.

Important

• You can only request that we mail 1099 forms once per tax season, so make sure to select all contractors who need their forms mailed.
  • Once the order is placed, it cannot be canceled.
• In order for forms to be compliantly postmarked by the Jan 31 IRS deadline, you'll need to submit your Gusto order in Gusto by Jan 28.

To have Gusto mail forms to one or more of your team members:

1. Sign in to your admin profile.
2. Click the Taxes & Compliance section and select Tax documents.
3. Click the 1099s tab.
4. Click the Distribute 202X 1099s button.
   • This button will only be available once the form packages are final. It will not be available when forms are still drafts.
5. Select I'd like Gusto to mail them to my employees.
6. Click Continue.
7. Review how it works and agree to the terms for sending forms.
8. Click Continue.
9. Select all contractors whose forms you want Gusto to mail—you can only place one 1099 order so any contractors not selected will still need to have their forms distributed another way unless they've agreed to go paperless and receive their forms electronically. You can select to:
   
   • Only mail to people who haven't requested electronic-only copies (recommended)
   • Mail to everyone
   • Individually select people to mail forms to
10. Click Save and continue.
11. Complete any remaining pages or prompts—these will vary based on your selection above.
12. Review the summary of the order and total cost.
13. Click Submit order.

We’ll send all original Forms 1099 and all corrected Forms 1099–this includes any and all corrected Form 1099s generated after the original Form 1099. 

Download a mail-friendly packet of all your contractors’ Forms 1099. This specific packet does not include the employer-copy of Forms 1099. To download a full packet that includes the employer copy for records, follow the instructions in the dropdown below.

1. Sign in to your admin profile.
2. Click the Taxes & Compliance section and select Tax documents.
3. Click the 1099s tab.
4. Click the Distribute 202X 1099s button.
   
   • This button will only be available once the form packages are final. It will not be available when forms are still drafts.
5. Click I'd like to download and distribute them on my own.
6. Review how to build your tax form packet and click Continue. 
7. Select all employees whose forms you want included in the mailable packet. 
   • We’ll email you when your packet is ready to download, and you’ll find it on your Documents page in a new row. You can also try refreshing this page in a few minutes—once it’s ready, you’ll see a link to download on the right.
8. When it’s ready, click the download icon and print your contractors’ Forms 1099.
   • Print your contractors' 1099 on standard, white printer paper (8.5" X 11"). 
9. Put all three forms per contractor in each envelope.
   • Envelope recommendation: For your convenience, we suggest using standard double-window 1099 envelopes (often referred to as style 7777-2). The windows are designed to align with the payer and recipient address information on the printed forms. However, you may use any standard business envelope, provided it is addressed correctly.
10. Mail the Forms 1099 to your contractors by Jan 31.
    • If you need more time, find the IRS extension request instructions here.

Get a PDF bundle for all contractors’ Form 1099s, including employer copies, and hand them out in person (if needed).

1. Sign in to your admin profile.
2. Click the Taxes & Compliance section and select Tax documents.
3. Click the 1099s tab.
4. Click the Annual 1099 records button.
5. Select the year.
6. Click Download.
7. If you need to distribute any, print the Forms 1099 for contractors.
   • Print the forms on standard, white printer paper (8.5" X 11").
8. Put all three forms per contractor in each envelope.
   • Envelope tips: We recommend using standard double-window 1099 envelopes (style 7777-2). These make sure the names and addresses show through the windows in the right spots. You can also use a regular business envelope, as long as the address is correct and easy to read.
9. Distribute the Forms 1099 to your contractors by Jan 31.
   • If you need more time, find the IRS extension request instructions here.

If only a few of your contractors need paper 1099s, you can also download specific contractor’s individual Form 1099s from their profile. To do so:

1. Sign in to your admin profile.
2. Go to the People section.
3. Click your contractor’s name.
4. Click the Documents tab.
5. Under “Employment Documents”, click 1099-NEC: 202X for the applicable year.
   • Final forms are made available in mid-to-late January.
6. Download, print, and distribute the Forms 1099 to contractors.
   • Print your contractor’s 1099 on standard, white printer paper (8.5" X 11").

You’re required to distribute paper copies of your teams’ 1099s unless they’ve given consent for electronic distribution. 

Forms will be available to distribute by mid-January, and the deadline to distribute is Jan 31. 

To check and see who has provided consent for electronic distribution in Gusto, follow these steps: 

1. Go to the Taxes & Compliance section and click Tax documents. 
2. Click the 1099s tab at the top of the page.
3. You’ll see a list of each teammate, with a column showing their delivery preference—this is only available once final forms are available in Gusto.  
   • Note: Since you’re required to provide paper copies, we’ll set their preference as “paper copy” by default if they haven’t chosen a preference yet. Contractors who want to go paperless must update their delivery preference by Jan 16 (before forms become available) to take effect for 2024 tax documents. 

The steps to correct a 1099-NEC are different depending on its filing status—draft, or already filed.

Go to a different article to learn the next steps: How to correct a Form 1099-NEC or stop a filing.

Reminders

• Contractors can view their 1099 in Gusto by late January.
• We file Form 1099-NEC regardless of the $2,000 threshold—in doing so, contractors have the necessary forms to quickly and accurately file their personal tax returns. 
  • If you’re an admin and do not want us to file one or more 1099-NEC forms, let us know when completing your end-of-year tasks, or contact us before the end of the year.
• Gusto does not currently support:
  • 1099-NEC filings to locals, where applicable. 
  • Back-up withholding, if required for your contractor. 
  • Contractor withholding, if required by the state (ex. for higher-paid contractors or non-resident contractors).
  • International contractor withholding or reporting.

Box descriptions for Form 1099-NEC

Below are simplified summaries of how Gusto fills out (or does not fill out) each box—learn more in the detailed IRS guidelines for filling out Form 1099-NEC.

Keep in mind: Gusto reports all earnings as non-employee compensation in Box 1 of the 1099-NEC we’ve prepared. test

Box 1: Non-employee compensation—this includes all compensation paid to the contractor, such as fees, commissions, prizes, and awards for services performed. As a reminder, Gusto reports all non-employee compensation in this box, regardless of the $2,000 IRS reporting threshold.

Box 2: Gusto does not currently support this, so the box will be left blank.

Box 3: Gusto does not currently support this, so the box will be left blank.

Box 4: Federal income tax withheld during the year—Gusto does not currently support this, so the box will be left blank.

Box 5: State tax withheld during the year—Gusto does not currently support this, so the box will be left blank.

Box 6: The state abbreviation and state withholding account number (if applicable) of the company that's paying and using the services of a contractor. This would only need to be reported if state income tax was withheld.

•  Gusto will list the applicable state abbreviation(s).

Box 7: State income paid to the contractor for the year. 

This FAQ explains new reporting rules under the One Big Beautiful Bill Act (OBBBA or OB3). It also covers how to handle contractor tips and upcoming IRS requirements.

1099-NEC reporting threshold

Q: What changed for 1099-NEC forms under OBBBA?

A: Starting in 2026, you only need to send a 1099-NEC if you pay a contractor $2,000 or more in a year. Before this, the limit was $600.

Q: Can I still send a 1099-NEC for less than $2,000?

A: Yes. You can send a 1099-NEC for any amount. Gusto will create and file 1099-NECs for all contractors unless you ask us not to. To stop a 1099 for one or more contractors, contact Gusto for help.

Q: Why send a 1099-NEC for less than $2,000?

A: Contractors may need it for their own taxes. It helps keep clean records. Some states may require it, even under the federal threshold. It shows good business practice.

Q: What does Gusto do with 1099-NECs?

Gusto will keep creating and filing 1099s for your contractors unless you tell us not to for that year.

Contractor tip reporting

Q: What if my contractors got tips in 2025?

A: Gusto did not track contractor tips for 2025. If your contractors earned tips, you must track and report them yourself.

Q: How do I report contractor tips for 2025?

A: You should:

1. Ask your contractors for their tip records.
2. Give contractors a statement or letter with their total tips by February 2, 2026.

IRS rules for 2025 are still pending. We will update this article when new guidance is released.

Q: What are the new occupation codes for tip workers?

The IRS will release a list of jobs that usually receive tips, each with a unique code, by October 2025. You must use the correct code when reporting tips.

Gusto will collect these occupation codes after the IRS publishes the list.

Q: Which jobs qualify for the tip deduction?

A: Workers qualify if they work in jobs where tips are common. See sample occupations in our OBBB article.