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Navigating 1099 Forms in the OBBBA Era: A Complete Guide for the 2025 Tax Season

Friday, January 09th, 2026

By: David L. Marrison, Field Specialist, Farm Management, Barry Ward, Director of the OSU Income Tax Schools and Jeff Lewis, Attorney and Program Coordinator- OSU Extension.

It is tax season! With tax returns set to be accepted by the IRS starting January 26 it is crucial for individuals and businesses to stay on top of important tax reporting deadlines. This is especially important this year due to the passage of the One Big Beautiful Bill Act (OBBBA) last July. This legislation significantly affects federal taxes, credits and deductions. Some of these provisions took effect in 2025 while others in 2026.

One of the important tax reporting areas to review in January are the guidelines and deadlines for 1099 forms. These 1099 forms, which report various types of non-wage income, need to be furnished to taxpayers by January 31. Additionally, copies also need to be sent to the IRS by the January 31st deadline (with a few exceptions) to avoid penalties and to ensure timely processing of tax returns.

This article will provide an overview of 1099 forms, highlighting the specifics of the 1099-NEC, 1099-MISC, and 1099-K forms. Additionally, we will share reporting deadlines, penalties for non-reporting, provide resource links from the IRS, and changes to the 1099 forms due to OBBBA. So, let’s dive in!

What is a 1099 Information Return?

A 1099 form is an information return used by businesses, financial institutions, and other organizations to report various types of income paid to individuals who are not employees. These forms are typically issued to independent contractors, freelancers, and vendors to report payments made for services rendered, interest earned, dividends, and other income types.

These returns help ensure that individuals and entities report income correctly on their tax returns. There are over 20 different 1099 forms. The major forms which farm families may issue or receive include:

  • 1099-NEC         Non-employee compensation
  • 1099-MISC       Miscellaneous income
  • 1099-K             Third party payment network transactions
  • 1099-G             Government programs (i.e. ARC/PLC, disaster payment)
  • 1099-INT          Interest income
  • 1099-DIV          Dividends and distributions
  • 1099-PATR       Cooperative distributions
  • 1099-S             Real estate transaction proceeds

Before Issuing a Form 1099

Before issuing any Form 1099, businesses should first collect a completed Form W‑9 from every vendor, contractor, or service provider they pay in the course of their trade or business. The W‑9 provides essential information such as the vendor’s legal name, business entity type, address, and taxpayer identification number (TIN), all of which are required for accurate 1099 reporting. Ideally, the W‑9 should be obtained before making any payment to ensure the information is correct and to avoid delays during tax season. If a vendor refuses to provide a W‑9 or provides an invalid TIN, the business is required to begin backup withholding, which means withholding 24% of the payment and remitting it to the IRS. Maintaining W‑9s on file for all vendors not only ensures compliance but also protects the business from penalties related to incorrect or missing taxpayer information.

1099-NEC

One of the most common 1099 forms used is the 1099-NEC, which reports payments to non-employees. The form is required to be issued when compensation totaling more than $600 per year is paid to a nonemployee for certain services performed for your business. The $600 amount will increase to $2,000 for payments made after December 31, 2025 (tax year 2026) due to OBBBA. This amount will also be adjusted annually for inflation.

If the following four conditions are met, you must generally report payment for non-employee compensation on Form 1099-NEC:

  1. You made the payment to someone who is not your employee.
  2. You made the payment for services for your trade or business (including government agencies and nonprofit organizations).
  3. You made the payment to an individual, partnership, estate, or in some cases, a corporation.
  4. You made payments to the payee of at least $600 during the year (or $2,000 beginning in 2026).

Examples of “nonemployee compensation” could include hiring a neighboring farmer to harvest, spray, or plant your crops or independent contractors such as crop consultants, mechanics, accountants, and veterinarians. Payment for parts or materials used to perform the service (if the supplying of the parts or materials was incidental to providing the service) is included in the amount reported as non-employee compensation.

Reporting is needed for payments made to unincorporated businesses (i.e. sole proprietorship or an LLC that has elected to be taxed as a sole proprietor or partnership) for compensation of $600 or greater. Generally, payments to a corporation, or an LLC which has elected to be taxed as a corporation, do not require a 1099-NEC to be issued. Two exceptions, which should be noted, are payments of $600 or greater to an attorney or veterinarian, regardless of business entity (corporation or unincorporated), these payments need to be reported on Form 1099-NEC.

If you are required to file a Form 1099-NEC, you must furnish a statement to the recipient and to the IRS by January 31 of each year or the next business day, if the due date is on a weekend or holiday. For the tax reporting year of 2025, the form is due January 31, 2026.

A form 1099-NEC can be issued even if the payment is below the reporting threshold ($600 for 2025) or is to a party that you are in doubt as to whether you are required to issue this informational return. There are no prohibitions or penalties for doing this.

Previously, business owners would file Form 1099-MISC to report non-employee compensation. As a historical note, Form 1099-NEC was re-introduced in 2020. It was previously used by the IRS until 1982 when the IRS added box 7 to Form 1099-MISC and discontinued the 1099-NEC form. Now, this compensation is listed in Box 1 on Form 1099-NEC.

A reminder that greater scrutiny has been given to the improper classification of an employee as an independent contractor. It is your duty to make sure that you have classified properly. For tax purposes, the IRS provides guidance on making this determination through behavior control, financial control, and the relationship of the parties. Details can be found in IRS publication 1779 located at: https://www.irs.gov/pub/irs-pdf/p1779.pdf

Form 1099-MISC

The Form 1099-MISC is used to report a variety of income payments made to others from your trade or business (not personal). These include, but are not limited to:

  • At least $10 in royalties (box 2)
  • At least $600 in:
    • Rents (box 1)
    • Prizes and awards (box 3)
    • Medical and health care payments (box 6)
    • Crop Insurance proceeds (box 9)

A reminder that the $600 amount will increase to $2,000 for payments made after December 31, 2025 (tax year 2026) due to OBBBA. This amount will also be adjusted annually for inflation. Reporting is needed for payments made to unincorporated businesses (i.e. sole proprietorship or an LLC that has elected to be taxed as a sole proprietor or partnership) for compensation for each reporting threshold ($600 or greater for rents or $10 for royalties). Generally, payments to a corporation, or an LLC which has elected to be taxed as a corporation, do not require 1099-MISC forms to be issued. However, there are exceptions as noted previously.

One question, we receive from farmers is “do I need to issue a 1099 to the landowners which I rent ground from?” As a farmer, if you made payment for services for your trade or business (i.e. your farm business), then you will need to issue a 1099-MISC to landowners who receive $600 or more in land rental payments (in aggregate).

The reporting deadlines for the 1099-MISC forms are a little different than the 1099-NEC. The 1099-MISC must be to the recipient by January 31 (like 1099-NEC) but are not due to the IRS until February 28 for paper copies or March 31 for e-filed returns.

1099-K

The 1099-K form may be a new form for some of our farm managers. Form 1099-K tracks income made from selling goods or providing services via payment apps and online marketplaces. Examples include (but are not limited to) PayPal, Venmo, Square, and eBay.

When such reporting was originally enacted, these third-party payment network transactions only needed to be reported for payees with more than 200 transactions and $20,000 in aggregated payments. The American Rescue Plan Act of 2021 eliminated the transaction requirement entirely and reduced the reporting threshold to $600, with these changes intended to take effect in 2022. The IRS delayed implementation of these changes, most recently stating that it would impose a $2,500 threshold for 2025. OBBA, however, reinstates the $20,000 and 200 transactions thresholds for required reporting, retroactive to 2022. It should be noted that the 1099-K thresholds will not be indexed for inflation.

Payment card companies, payment apps, and online marketplaces are required to fill out Form 1099-K and send it to the taxpayer and to the IRS by January 31. You will receive 1099-K if:

  • You take direct payment by credit or bank card for selling goods or providing services. If customers pay directly by credit, debit or gift card, you will receive a Form 1099-K from the payment processor or payment settlement entity, no matter how many payments received or how much they were for.
  • A payment app or online marketplace is required to send you a Form 1099-K if the payments received for goods or services total more than 200 transactions and $20,000 in aggregated payments (per OBBBA).

Whether or not you receive a Form 1099-K, you must still report any income from these types of transactions on your tax return. If you accept payments on different platforms, you could get more than one Form 1099-K. Personal payments from family and friends should not be reported on Form 1099-K because they are not payments for goods or services.

Penalties

If you fail to file the correct information return by the due date (to the IRS and/or taxpayer) and cannot show reasonable cause, you may be subject to a penalty. Penalties are changed for each information return which isn’t filed to the IRS on time and to each payee (a penalty for each). These penalties can range from $60 to $660 depending on the number of days on which the filing is late. Additional penalties can also be assessed for intentional disregard. Interest is also charged. More details can be obtained at: https://www.irs.gov/payments/information-return-penalties

Additional Information

A few additional pointers about 1099 information returns include:

  • A crucial point to remember is that all income received for goods and services is still considered taxable income and must be reported on your tax return, even if you don't receive a 1099 form. 
  • Starting in tax year 2023, if you have 10 or more information returns, you must file them electronically. Electronic copies can be submitted through the IRIS Taxpayer Portal at http://irs.gov/iris or through a third-party software provider.
  • For authoritative guidance, individuals and businesses should consult the IRS website or a qualified tax professional to ensure proper compliance. 

IRS Resources:

The following resources are available from the IRS with regard to the information returns discussed in this article.

Publication 1220: https://www.irs.gov/pub/irs-pdf/p1220.pdf

1099-NEC: https://www.irs.gov/forms-pubs/about-form-1099-nec

1099-MISC: https://www.irs.gov/forms-pubs/about-form-1099-misc

1099-K: https://www.irs.gov/businesses/understanding-your-form-1099-k

1099 Penalties: https://www.irs.gov/payments/information-return-penalties

Disclaimer:

The information provided in this article is for educational purposes. This article was designed to provide accurate tax education information. Farm managers are encouraged to seek the assistance of qualified tax professionals with the completion of their taxes.

 

 

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