2026-10-20・Automation / Small business / US tax

Paying freelancers in the US - Form W-9, Form 1099-NEC and a simple tracking sheet

You hire a freelance designer for your logo. A bookkeeper helps you once a month. A handyman fixes the shop door. Then January comes, and you need names, addresses and tax ID numbers for all of them. Some have moved. Some do not answer emails.

This article explains the two IRS forms that matter when a small business pays freelancers, and gives you a simple sheet to track everything during the year.

The rules below were checked against IRS pages on October 20, 2026. Tax rules change, and every business is different. Check the linked IRS pages, or ask your tax professional, before you file.

The two forms in one minute

The W-9 collects the information. The 1099-NEC uses it.

Form W-9: collect it before you pay

The IRS says Form W-9 is used to give your correct TIN to the person who must file an information return. In plain words: your freelancer fills it in so you can file a 1099 for them later.

Two practical points:

• It goes to you, not to the IRS. The form itself says: "Give form to the requester. Do not send to the IRS." Keep it in your own records.
• The IRS suggests you request it. The IRS general instructions for information returns say the IRS suggests you ask the recipient to complete Form W-9 to get their TIN.

Why "before you pay" matters

If a payee does not give you their TIN, backup withholding can apply. The IRS instructions for the requester of Form W-9 say the backup withholding rate is 24% of reportable payments. If you were required to withhold and did not, you may be liable for the amount you did not collect.

The easy fix is a simple rule: no W-9, no first payment. Ask for it at the same time you agree the job.

Check the number

The IRS offers a TIN Matching e-service. Payers can use it to check name and TIN combinations against IRS records before they file information returns. It is worth knowing about if you pay many contractors.

Form 1099-NEC: what it reports

The IRS says to use Form 1099-NEC to report nonemployee compensation. According to the IRS instructions, you generally report a payment as nonemployee compensation if all of these are true:

1. You paid someone who is not your employee.
2. You paid them for services in the course of your trade or business.
3. You paid an individual, partnership, estate, or in some cases a corporation.
4. You paid them at least the threshold amount during the year (see below).

The threshold changed

This is the part many people still get wrong. The IRS instructions for Forms 1099-MISC and 1099-NEC say:

For tax years beginning after 2025, the minimum threshold amount for reporting certain payments ... increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027.

So for tax years beginning after 2025, the 1099-NEC threshold is $2,000 per payee for the year, and the number may change with inflation from 2027. Older guides that say $600 describe the earlier rule. Always check the current instructions for the year you are filing.

Payments to corporations

The IRS instructions say payments to a corporation are generally not reported on Form 1099-NEC. There are exceptions. The main one for small businesses: attorneys' fees must be reported even if the law firm is a corporation. This is why the tax classification on the W-9 (line 3a, with boxes such as C corporation, S corporation and partnership) matters. It tells you whether the payee is a corporation.

Deadline: January 31

The IRS instructions say you must file Form 1099-NEC with the IRS on or before January 31, and give the payee their copy by January 31 too. There is no separate, later date for the IRS copy, so you need everything ready in January.

Paper or electronic?

The IRS says that if you must file 10 or more information returns during the year, you must e-file. The 10 is counted across all your information returns together, not per form type.

A simple tracking sheet

You do not need special software to stay on top of this. Two tabs in Excel or Google Sheets will do.

Tab 1: Contractors

One row per freelancer.

Tips:

• Do not type the full TIN into a shared sheet. Store the W-9 PDF in a private folder and just mark "Yes" here.
• Use a drop-down list for tax classification, matching the boxes on line 3a of the W-9.
• Add conditional formatting so "No" in the TIN column turns red.

Tab 2: Payments

One row per payment.

The summary formula

Add a "Total paid this year" column to Tab 1:

=SUMIFS(Payments!D:D, Payments!B:B, A2, Payments!F:F, "Yes")

Then add a "Needs 1099-NEC?" column:

=IF(J2>=2000, "Check: 1099-NEC", "")

(Here J is the total column. Replace 2000 with the threshold in the current IRS instructions for the year.)

In the example above, Jane Rivera's total is $2,150, so she is flagged. Tom Lee is under the threshold so far.

A year-round routine

1. New contractor? Send the blank W-9 from irs.gov with your first email. Do not pay until it is back.
2. Every payment: add one row to Tab 2 the same day.
3. Every quarter: check for red "No" cells and chase missing W-9s while people still answer.
4. Early December: sort Tab 1 by total paid. Check addresses with anyone flagged.
5. January: file the 1099-NEC forms and send the payee copies by January 31.

Find out what else you could automate

Chasing forms and adding up payments are exactly the kind of jobs a small amount of automation can take off your plate. Our free Small Business Automation Check asks which country you are in, your industry and your tasks, and shows which jobs are easiest to automate and how to start.

Sources

• IRS: About Form W-9, Request for Taxpayer Identification Number and Certification
• IRS: Form W-9 (PDF)
• IRS: Instructions for the Requester of Form W-9
• IRS: About Form 1099-NEC, Nonemployee Compensation
• IRS: Instructions for Forms 1099-MISC and 1099-NEC
• IRS: General Instructions for Certain Information Returns

This article is general information, not tax or legal advice.