Paying contractors: Form W-9 and Form 1099-NEC

A Form W-9 gives you a contractor's name and taxpayer ID; you keep it, and it does not go to the IRS. If your business paid a contractor $2,000 or more for services in 2026, Form 1099-NEC is due to the contractor and to the IRS by February 1, 2027. Once a contractor's payments for the year reach $2,000, payments to one who has not given you a taxpayer ID are subject to 24% backup withholding.

Last reviewed September 24, 2026 · Tax year 2026 · Federal

This is for a business that pays people who are not its employees. Whether a worker is an employee or a contractor, and what a 1099-NEC reports, are covered in What are W-2 and 1099 forms?

Form W-9

Form W-9 is how you ask a U.S. person, including a resident alien, for their taxpayer identification number (TIN) and certain certifications. For an individual the TIN is usually a Social Security number, and for a business an employer identification number (EIN). The form also asks for the contractor's federal tax classification, which tells you whether they are a corporation. The contractor fills it in and gives it to you. You keep it; it is not sent to the IRS.

If there is no TIN

If a contractor does not give you a TIN, or the IRS tells you the TIN is incorrect, you must withhold from reportable payments to them. This is backup withholding. The rate is 24%, and it continues until the cause is fixed. It applies to nonemployee compensation. The amount withheld goes in box 4 of the contractor's 1099-NEC and is reported on Form 945, the return for federal income tax withheld from payments other than payroll. Corporations are generally exempt from backup withholding, with exceptions that include attorneys' fees.

Backup withholding starts with the payment that brings the year's total for that contractor to $2,000, or with the first payment if you had to file a 1099-NEC for them last year. A W-9 collected before you pay keeps it from arising.

When a 1099-NEC is due

A business files Form 1099-NEC for each person it paid $2,000 or more in nonemployee compensation during the year, in the course of its trade or business. Personal payments are not reported. The threshold was $600 until Pub. L. 119-21 raised it to $2,000 for payments made after December 31, 2025.

Two kinds of payment are generally left off the 1099-NEC:

Payments to a corporation, including an LLC taxed as one. Attorneys' fees are the main exception and are reported whatever the entity.
Payments by credit card, payment card or a third party network, such as a payment app's business payments. These go on the processor's Form 1099-K, if one is required, instead. A direct bank transfer stays on the 1099-NEC, because the automated clearing house that moves it does not qualify as a third party settlement organization.

The Code sets January 31 for the 2026 forms, both to the contractor and to the IRS. January 31, 2027 is a Sunday, so they are due Monday, February 1, 2027. If you file 10 or more information returns of all types in total, you must file them electronically.

What to send KFM

If KFM prepares your 1099s, upload these through the client portal, not by email:

A Form W-9 for each contractor you paid.
The total you paid each contractor in 2026, and how you paid it (check, bank transfer, card or app), so that card and third party network payments can be left off.
Any backup withholding you took out, by contractor.

How to upload is in Using the client portal.

Sources

This article is general educational information, not tax, legal, or accounting advice, and does not create a client relationship. Tax law changes and depends on your specific facts. Information is current as of September 24, 2026 for tax year 2026; verify before acting. Consult a qualified CPA, EA, or attorney about your situation.

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