How to correct a 1099-NEC (for admins)

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

Get next steps based on the status of the form—draft, or final. 

If the form is still a draft (not yet filed):

• Update the contractor’s name, SSN, or EIN in Gusto.
• We'll update the draft form within 24–48 hours.
  • If it does not update within two business days, message us from the  section of your account. 

If the form is already filed (final):

• Update the contractor’s details for them in Gusto.
• Message us from the section of your account to request a corrected Form 1099-NEC.

Get next steps based on the status of the form—draft, or final. 

If the form is still a draft (not yet filed):

• Record or adjust payments made outside of Gusto. This updates the total.
• You can still pay contractors in Gusto, or try to adjust prior payments made in Gusto if they're wrong. This updates the total. 

If the form is already filed (final):

• You can correct the payment amount and Gusto will file a corrected 1099.
• Use the steps below to correct Boxes 1 and 7 after a 1099 has already been filed. 

Steps to correct Boxes 1 and 7 after the 1099 was filed

Go to Taxes & Compliance and click Tax Documents.

Click the 1099s tab.

Next to “Form 1099: 20XX,” click the three-dot action menu.

Click Submit a correction.

Choose the contractor.

Enter the correct payment amounts—this will correct Boxes 1 and 7 on Form 1099-NEC. 

• To remove an existing state: Put $0 as the “Corrected state income amount.”
• To add a state: Click Add a state and enter the income amount.

Review the total corrected Box 1 total for non-employee compensation.

Click Save & continue to review.

Review all information—after you submit, Gusto will file the corrected form with the IRS in 1–2 weeks, and you can download it to give to your contractor.

• You’re able to cancel the correction until the form is officially filed.
• Important: Some states require you to file corrected 1099s with them yourself—Gusto only files corrected forms with the IRS. Contact your state to find out if you need to file the corrected form, and how to do so.

Let us know if you want us to notify your contractor that a corrected Form 1099 is available in their Gusto account.

Click Submit correction.

Download the form and give it to your contractor.

• They'll also have access to the corrected 1099 in the Documents section of their Gusto account.

Let your contractor know they should wait to file their personal tax returns until Gusto has officially filed the corrected form with the IRS.

Cancel a corrected Form 1099-NEC that has not yet been filed

Click the People section.

Locate the contractor profile you need to cancel the correction for.

• If you do not see them listed in the active contractors, click Show dismissed people.

Go to the Documents tab of the contractor’s profile.

Next to “Form 1099 (Corrected): 20XX”, click the three-dot Actions menu.

Click Cancel correction.

• This action cannot be undone. You’ll need to initiate a new correction if amounts are still incorrect.

Click Yes, Cancel this correction.

Gusto does not create or file corrected 1099s for address changes (or other cosmetic changes) since they do not affect taxes.

US contractor addresses have no impact on payments, or Gusto's 1099-NEC filings. 

Update the contractor’s address in Gusto (or have them do it on their own) so it’s correct for future forms.

Make sure a 1099-NEC is not required before asking Gusto to stop a filing.

After you've confirmed what’s compliant, if you still want us to stop a 1099-NEC from being filed, message us from the section and tell us which contractors you do not want a form filed for.

The deadline to enter historical contractor payments for the previous year is in early January, and we send notifications to admins at the end of the calendar year about these final deadlines.

Reminder: Reporting historical contractor payments (made outside of Gusto) alone does not create 1099s, a payment must also be processed in Gusto, before the end-of-year deadline.

If an original 1099 was not created before the deadline, file the 1099 outside of Gusto.