Every January, owners across the South Shore go through the same scramble: finding contractor addresses, chasing missing tax ID numbers, and trying to remember who they paid and how much. This year there is a twist. The federal reporting threshold for the most common 1099 forms has changed, and plenty of business owners in Hanover, Weymouth, and across Massachusetts are searching for what it means.
Here is a plain explanation, plus the short list of things worth doing now, while there is still time before the deadline.
What changed
For years, you generally had to issue a Form 1099-NEC to any non-employee you paid $600 or more for services during the year. Form 1099-MISC used the same $600 level for most of its categories, such as rent.
The 2025 federal tax law, commonly called the One Big Beautiful Bill Act, raised that threshold to $2,000 for payments made in 2026. Beginning in 2027, the amount is scheduled to be adjusted each year for inflation.
The same law also set the threshold for Form 1099-K, the form payment processors send, back to $20,000 and 200 transactions, rather than the much lower levels that had been planned.
What did not change
A few things stay exactly the same, and they matter more than the new number:
- The deadline. Forms 1099-NEC are still due to both the contractor and the IRS by January 31. When that date falls on a weekend, as it does in 2027, the deadline moves to the next business day.
- The income is still taxable. A contractor you paid $1,500 in 2026 may not receive a 1099 from you, but they still owe tax on that income.
- Card and app payments are handled differently. Payments you made by credit card or through a payment network are generally reported by the processor, not by you on a 1099-NEC.
- Attorneys are a special case. Payments to attorneys for legal services are generally reportable even when the law firm is a corporation.
Massachusetts has its own information-return rules, so ask your CPA whether any state filing applies to your business.
Try it
Does this contractor get a 1099-NEC?
Enter what you paid this contractor during the year to compare it with the threshold.
0 days until the February 1, 2027 deadline
Why your books decide how easy January will be
The threshold is a simple number. Applying it is not, unless your books are current. To know who crossed $2,000, you need every contractor payment recorded to the right vendor, separated from card payments, and totaled for the calendar year.
In practice, the January scramble usually comes from three things:
- Vendors recorded under several names. “Mike’s Electric,” “Mike Electric LLC,” and “M. Sullivan” might all be the same subcontractor.
- Missing W-9s. Without a W-9 on file, you are hunting for a tax ID number in the last week of January.
- Payments recorded months late. If November and December are not entered yet, nobody can say who crossed the threshold.
What to do between now and December 31
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How we handle this for monthly clients
For our monthly bookkeeping clients, 1099 preparation starts in the fall, not in January. Because their books are reconciled every month, vendor totals are already accurate, missing W-9s get flagged well before year-end, and the CPA receives clean numbers. That year-end handoff is one of the quieter benefits of current books: as Liliane Larsen puts it, year-end “should not be that difficult.”
Larsen Bookkeeping does not prepare tax returns. We keep the books that your CPA relies on, and we work with your CPA at year-end and whenever they need clarification during the year.
Frequently asked questions
It is good practice to collect a W-9 before the first payment to any contractor. Payments can add up over the year, and having the form on file avoids a scramble later.
No. For payments made in 2025, the $600 threshold applied. The $2,000 threshold applies to payments made in 2026.
Not if you start now. A catch-up brings the year current so contractor totals are accurate. We scope catch-up work as the start of ongoing monthly bookkeeping, so next January is easier still.
Start with a conversation
If you run a business in Hanover, Pembroke, Rockland, or anywhere in Massachusetts and the year-end paperwork already feels heavy, request a free consultation. Tell us how your books are kept today, and we will talk through what would help. Prefer the phone? Call 781-924-1489.
This article is general education, not tax or legal advice. Rules change, so confirm the details for your business with your CPA. Source: IRS, Instructions for Forms 1099-MISC and 1099-NEC (opens in a new tab).
Larsen Bookkeeping has kept the books for owner-run businesses since 2001. It was founded on Massachusetts’ South Shore and works with clients fully online, in QuickBooks Online and by phone, email, and screen share.