1099-NEC Filing for Landlords: New $2,000 Threshold for 2026
The 1099-NEC filing threshold increased from $600 to $2,000 for 2026 under the OBBBA. Learn which payments require a 1099, when to file, and penalties for non-compliance.
The 1099-NEC Threshold Just Changed
Starting with payments made in 2026, the filing threshold for Form 1099-NEC increased from $600 to $2,000. This change, enacted by the One Big Beautiful Bill Act (OBBBA), applies to all businesses — including landlords who pay independent contractors for property maintenance, repairs, and management services.
If you paid a contractor $600 or more in 2025, you were required to file a 1099-NEC. For 2026, that threshold is $2,000. The threshold will be adjusted for inflation annually in $100 increments.
What This Means for Landlords
Most landlords hire independent contractors for property-related work: plumbers, electricians, handymen, landscapers, painters, property managers, and others. Until now, any contractor who received $600 or more from you in a calendar year required a 1099-NEC.
The higher threshold eliminates filing requirements for many smaller jobs:
| Scenario | 2025 Rule ($600) | 2026 Rule ($2,000) |
|---|---|---|
| Plumber paid $800 for two service calls | 1099-NEC required | No 1099-NEC needed |
| Handyman paid $1,500 across multiple jobs | 1099-NEC required | No 1099-NEC needed |
| Landscaper paid $3,600 for the year | 1099-NEC required | 1099-NEC required |
| Property manager paid $6,000 in fees | 1099-NEC required | 1099-NEC required |
| Electrician paid $450 for a single repair | No 1099-NEC needed | No 1099-NEC needed |
Who Benefits Most
Small landlords with one or two properties typically hire contractors for individual jobs that cost a few hundred to a few thousand dollars. Many of these payments fell in the $600–$1,999 range, triggering 1099-NEC filing obligations that were disproportionately burdensome for the amount involved. The new threshold removes those filings.
Larger portfolio owners who pay property management companies, maintenance crews, or regular contractors $2,000 or more per year will still need to file.
When a 1099-NEC Is Required
You must file a 1099-NEC when all of the following are true:
- You paid $2,000 or more (for 2026) to a single payee during the calendar year
- The payment was for services related to your rental business (not for products or goods)
- The payee is not a corporation (C-corps and S-corps are generally exempt, with exceptions for attorneys and medical services)
- The payee is not your employee (employee payments go on Form W-2)
Payments That Do Not Require a 1099-NEC
Even above the $2,000 threshold, you do not file a 1099-NEC for:
- Payments to corporations: Most incorporated businesses are exempt. Ask for a W-9 — if the entity type is a C-corp or S-corp, no 1099 is needed.
- Payments made via credit card or payment apps: These are reported by the payment processor on Form 1099-K. You do not also file a 1099-NEC.
- Payments for products: Buying materials at a hardware store or ordering supplies does not trigger 1099-NEC filing.
- Rent payments you make: If you sublease, rent payments go on Form 1099-MISC, not 1099-NEC.
How to Stay Compliant
Step 1: Collect W-9 Forms Up Front
Before paying any new contractor, request a completed Form W-9. This gives you their legal name, address, tax ID number (SSN or EIN), and entity type. Without a W-9, you cannot properly prepare a 1099-NEC at year-end.
Timing matters: Get the W-9 before the first payment. Chasing contractors for W-9s in January is one of the most common compliance headaches landlords face.
Step 2: Track Payments by Contractor
Maintain a running total of payments to each contractor throughout the year. Your accounting software or a simple spreadsheet works — the key is tracking cumulative payments per payee, not per job.
| Contractor | Date | Amount | Running Total | 1099 Required? |
|---|---|---|---|---|
| ABC Plumbing (sole prop) | Mar 15 | $650 | $650 | Not yet |
| ABC Plumbing (sole prop) | Jul 22 | $900 | $1,550 | Not yet |
| ABC Plumbing (sole prop) | Nov 3 | $750 | $2,300 | Yes |
Step 3: File by the Deadline
For the 2026 tax year, Form 1099-NEC is due:
- To the contractor: January 31, 2027
- To the IRS: January 31, 2027
Both deadlines are the same — there is no automatic extension for 1099-NEC (unlike some other information returns). If January 31 falls on a weekend, the deadline moves to the next business day.
Step 4: Choose Your Filing Method
- IRS Free File: The IRS offers free electronic filing for information returns through IRIS (Information Returns Intake System).
- Tax software: Most accounting software (QuickBooks, Xero, Wave) can generate and e-file 1099s.
- Paper filing: If filing fewer than 10 returns, you can still file on paper. Above 10 returns, electronic filing is mandatory.
Penalties for Not Filing
The IRS imposes penalties for late or missing 1099-NEC filings. For 2026 returns:
| Filing Delay | Penalty Per Return |
|---|---|
| Within 30 days of deadline | $60 |
| More than 30 days late, before August 1 | $130 |
| After August 1 or not filed | $330 |
| Intentional disregard | $660+ (no cap) |
Small businesses (gross receipts of $5 million or less) have lower maximum annual penalties, but the per-return penalties are the same. For a landlord with 5 missed 1099s filed after August 1, that is $1,650 in penalties — likely more than the administrative cost of filing correctly.
Backup Withholding
If a contractor refuses to provide a W-9, you are required to withhold 24% of their payment as backup withholding and remit it to the IRS. This is a strong incentive to collect W-9s up front.
The 1099-NEC vs. 1099-MISC Distinction
Landlords sometimes confuse when to use each form:
| Form | Use For |
|---|---|
| 1099-NEC | Payments for services (contractors, property managers, repair workers) |
| 1099-MISC | Rent paid to others, royalties, prizes, other non-service payments |
If you hire a property manager as an independent contractor, their management fees go on 1099-NEC. If you pay rent for space (like a storage unit for your rental business), that rent goes on 1099-MISC Box 1.
Common Landlord Mistakes with 1099s
1. Not Filing at All
The most common mistake. Many small landlords do not realize they are considered a business for 1099 purposes. If you own rental property and pay independent contractors, you have a filing obligation.
2. Paying via Venmo/Zelle and Assuming No 1099 Is Needed
Payment method does not determine your filing obligation. Venmo and Zelle personal payments are not reported on 1099-K the way credit card payments are. If you pay a contractor $2,000+ via Venmo personal transfer, you still need to file a 1099-NEC.
However, if you pay through Venmo or PayPal using the "goods and services" designation, the payment platform reports it on 1099-K and you do not also file a 1099-NEC.
3. Filing for Corporations
If the contractor's W-9 shows they are a C-corp or S-corp, you generally do not file a 1099-NEC. The two exceptions are payments to attorneys (always reportable) and payments for medical/health care services.
4. Confusing the $2,000 Threshold with Deductibility
The 1099 filing threshold has nothing to do with whether you can deduct the expense. You can deduct any legitimate business expense on Schedule E regardless of amount. A $500 plumbing repair is fully deductible even though no 1099 is required.
Record-Keeping Best Practices
Good records make 1099 filing straightforward:
- Keep all W-9s on file for at least 4 years after the last payment to each contractor
- Use separate payment methods for business and personal expenses so rental-related contractor payments are easy to identify
- Record the contractor name, service description, date, and amount for every payment — your records should clearly support both your Schedule E deductions and your 1099 filings
- Set a calendar reminder for January to review the prior year's payments and prepare 1099s
Key Takeaways
- The 1099-NEC threshold increased from $600 to $2,000 for payments made in 2026 and later
- You still must file for any single contractor paid $2,000+ in a calendar year for services
- Collect W-9 forms before making first payments to new contractors
- Credit card and payment app "goods and services" payments are reported on 1099-K — do not double-report
- Penalties for non-filing range from $60 to $660+ per return
- The filing threshold does not affect your ability to deduct expenses — all legitimate rental expenses are deductible regardless of amount
For a complete analysis of your rental property deductions including contractor expenses, depreciation, and more, try the RentalDeductions calculator. For a professional tax report covering all your deductions, start a free report.