How to Issue 1099s to Contractors — A Landlord's 4-Step Guide

TL;DR: If you paid a contractor $2,000 or more in calendar year 2026 for services related to your rental property, you must file Form 1099-NEC with the IRS by January 31, 2027 and send a copy to the contractor. Payments made before Jan 1, 2026 still use the $600 threshold. Collect a W-9 from each vendor before you pay them, verify the TIN matches IRS records, and file on time to avoid penalties.

_Last reviewed: July 2026 · 6 min read_

You hired a plumber to fix a slab leak, paid a landscaper to clear out overgrown brush, and wrote checks to a handyman every other month. By mid-January the following year, you realize you owe the IRS a stack of 1099 forms — and the deadline is two weeks away. Issuing 1099s to contractors is an annual landlord obligation, and the process is straightforward once you know the steps.

Okoniq Property Hub logs every vendor payment with a photo of the invoice and a category tag, so when 1099 season arrives you can filter by vendor and see the year's total in seconds.

Who needs a 1099-NEC from you?

You must file Form 1099-NEC for any person or unincorporated business you paid $2,000 or more during calendar year 2026 for services related to your rental property. That threshold applies to payments made on or after January 1, 2026 — payments made in 2025 still use the old $600 threshold when you file forms in early 2026 for tax year 2025. The threshold is indexed for inflation after 2026, so confirm the current figure on IRS.gov each year.

The $2,000 is cumulative across all payments to that vendor during the calendar year. If you paid a handyman $500 in March and $1,600 in October, the total is $2,100 and you owe them a 1099-NEC. Services include labor, parts when billed together with labor, equipment rental, and professional fees. Payments for materials alone — lumber you picked up yourself at a supply yard, for example — are not reportable unless the vendor also provided installation labor on the same invoice.

You do not need to issue a 1099 to a corporation (C-corp or S-corp) unless the payment was for legal or medical services, which rarely apply to rental property work. You also do not issue 1099s for rent paid to individual landlords — that income is reportable by the recipient, but Form 1099-NEC is not the mechanism. Sole proprietors, single-member LLCs, partnerships, and independent contractors who are not incorporated do require a 1099-NEC if you paid them $2,000 or more in 2026. When you track rental expenses for taxes, note the vendor's entity type so you know who gets a form.

How do you collect the vendor's W-9?

Before you pay a contractor for the first time, hand them Form W-9 and ask them to fill it out. The W-9 captures their legal name, business name if different, taxpayer identification number (TIN — either an SSN or EIN), address, and entity type. You need this information to complete the 1099 accurately, and you need it before you issue payment so you are not chasing vendors down in January when the deadline looms.

The vendor's legal name and TIN must match IRS records exactly. A mismatch triggers a backup-withholding notice, and the IRS may penalize you for filing an incorrect form. If the contractor operates under a trade name — "Joe's Plumbing" — but their legal name is "Joseph Martinez," the legal name goes in box 1 of the W-9 and the trade name goes in box 2. Use the legal name on the 1099. The TIN is either a nine-digit Social Security Number for a sole proprietor or an Employer Identification Number for a partnership or LLC. Do not guess — ask the vendor to provide the number on the W-9, and verify it against the name using the IRS TIN Matching service if you file electronically.

Store the completed W-9 in your records. You do not send it to the IRS — it is your backup documentation if the IRS questions a 1099 you filed. If a contractor refuses to provide a W-9 or provides an obviously incorrect TIN, you are required to withhold 24% of future payments for backup withholding and remit it to the IRS using Form 945. Most contractors will hand you a W-9 without hesitation; it is routine for them.

When and how do you file Copy A with the IRS?

Form 1099-NEC Copy A must be filed with the IRS by January 31, 2027 for payments made in calendar year 2026. The deadline is the same whether you file on paper or electronically — there is no extension for electronic filers the way there used to be for 1099-MISC. If January 31 falls on a weekend or holiday, the deadline shifts to the next business day. Late filings trigger penalties that start at $60 per form if you file within 30 days, escalating to $310 per form if you file after August 1 or never file at all, with a maximum penalty per year. Missing the deadline because you forgot to collect a W-9 in March is expensive.

You can file on paper using Form 1096 as a transmittal cover sheet if you have fewer than 250 forms to file. Purchase carbonless 1099-NEC forms from an office supply store or the IRS, fill out Copy A for each contractor, total the amounts on Form 1096, and mail the packet to the IRS address listed in the 1096 instructions — the address varies by state. Do not file Copy A and Copy B together; Copy A goes to the IRS, Copy B goes to the contractor.

If you have 250 or more forms or prefer electronic filing, use the IRS FIRE system (Filing Information Returns Electronically) or a third-party payroll service that handles 1099 filing. Electronic filing reduces the penalty for late submission if you miss the deadline, and the IRS prefers it because the data flows directly into their systems. Most landlords with a handful of contractors file on paper; landlords with dozens of vendors or a property management company handling payments file electronically. Confirm the current filing threshold and whether electronic filing is mandatory for your situation on IRS.gov before you prepare forms.

What do you send to the contractor?

Copy B of Form 1099-NEC must be furnished to the contractor by January 31, 2027 — the same deadline as Copy A to the IRS. Mail it to the address on the W-9, or hand-deliver it if the contractor is local. The contractor needs Copy B to prepare their own tax return and match the income you reported to the IRS. If the amounts do not match, the IRS will send the contractor a CP2000 notice proposing additional tax, and the contractor will come back to you asking why the 1099 says one thing and their records say another.

Copy B must show the contractor's name, address, and TIN exactly as they appear on the W-9, the calendar year, and the total amount you paid them in box 1 (nonemployee compensation). Do not round. If you paid $2,047.83, write $2,047.83. The IRS matches the contractor's TIN and the dollar amount when they file their return — a $2,000 entry on the 1099 and a $2,048 entry on Schedule C will flag a mismatch. Include your own name, address, and TIN (EIN if you operate as an LLC, SSN if you are a sole proprietor reporting on Schedule E) in the payer section. The contractor keeps Copy B for their records and uses it to complete their Form 1040 Schedule C or their entity's tax return.

If you realize after January 31 that you issued a 1099 with the wrong amount or TIN, file a corrected 1099-NEC marked "CORRECTED" in the checkbox at the top and send Copy B to the contractor with a note explaining the change. The IRS will process the corrected form and replace the original in their system. Do not ignore the error — the contractor's tax liability depends on the correct figure, and the IRS may assess penalties against you for a knowing misstatement. When you log rental expenses in Okoniq, you can export a vendor report by calendar year and cross-check the total against what you wrote on the 1099 before you mail it.

How do you keep 1099 issuance records organized year after year?

Store a copy of every 1099-NEC you file for at least three years from the due date of the return for which the income is reported. The IRS statute of limitations for assessing additional tax is three years in most cases, six years if the taxpayer omitted more than 25% of gross income, and indefinite if fraud is suspected. Keeping the forms for three years covers routine audits; keeping them longer is prudent if your records are digital and storage is cheap.

Keep the W-9 forms indefinitely or until the vendor relationship ends and three years have passed since the last 1099. If the IRS questions a TIN on a 1099 you filed five years ago, the W-9 is your proof that you requested and received the number in good faith. Organize the forms by calendar year and by vendor name so you can retrieve them quickly. A folder labeled "2026 1099s" with subfolders for each contractor works. If you use Okoniq to track vendor payments, tag each payment with the vendor's name and export a year-end report — the app does not generate 1099 forms, but it gives you the data you need to fill them out accurately.

Review your vendor list in December each year and confirm who crossed the $2,000 threshold. If a contractor is close — $1,900 in November — and you expect to pay them again before year-end, add that payment to the total and issue a 1099 in January. If you are unsure whether a payment is reportable, issue the form. The penalty for filing an unnecessary 1099 is zero; the penalty for failing to file a required one starts at $60 per form and climbs quickly. When you estimate quarterly tax payments for rental income, include the cost of preparing and mailing 1099s as a deductible expense — it is part of your administrative overhead.

FAQ

Do I need to issue a 1099 to my property manager?

If your property manager is a corporation, no — payments to C-corps and S-corps are not reportable on Form 1099-NEC unless the payment was for legal or medical services. If the property manager is a sole proprietor or partnership and you paid them $2,000 or more in 2026 for management fees, yes, you must issue a 1099-NEC. The property manager issues 1099s to the contractors they paid on your behalf if they are acting as your agent; confirm who has that responsibility in your management agreement.

What if a contractor refuses to give me their Social Security Number on the W-9?

You are required to withhold 24% of any payment you make to a contractor who refuses to provide a TIN or provides an incorrect one, and remit the withheld amount to the IRS using Form 945. This is called backup withholding. Most contractors will provide the number when you explain the alternative. If they still refuse, document the refusal, withhold 24% of the payment, and file Form 945 quarterly. You still must attempt to file a 1099-NEC at year-end with whatever information you have, noting the missing TIN.

Can I use accounting software to generate and e-file 1099s?

Yes — most accounting platforms (QuickBooks, Xero, FreshBooks) include 1099 preparation and electronic filing as a paid add-on. The software pulls the vendor's W-9 data and year-to-date payment total from your records, generates the forms, and submits them to the IRS through an authorized e-file provider. E-filing is faster and reduces transcription errors, but you still must collect W-9s from contractors before the year ends and verify the totals before you submit. Confirm the software is IRS-approved for FIRE submissions before you rely on it.

Do I need to issue a 1099 if I paid a contractor exactly $2,000?

Yes — the threshold is $2,000 or more for payments made on or after January 1, 2026. If the total for the calendar year is $2,000.00, you must file a 1099-NEC. The threshold is cumulative across all payments to that vendor during the year, so two $1,000 invoices in different months count as $2,000 and trigger the requirement.

What is the penalty if I file a 1099 late?

The penalty depends on how late you file. If you file within 30 days of the January 31 deadline, the penalty is $60 per form. If you file more than 30 days late but by August 1, the penalty is $120 per form. If you file after August 1 or do not file at all, the penalty is $310 per form. There is a maximum penalty per year, but it is high enough that missing even a handful of forms is costly. If you intentionally disregard the filing requirement, the penalty is at least $630 per form with no maximum. File on time.

<div class="glass rounded-2xl p-5 mt-7 max-w-4xl border border-red-400/30 bg-red-500/5"> <div class="flex items-start gap-3"> <span class="text-2xl flex-shrink-0">⚠️</span> <div class="flex-1 min-w-0"> <p class="text-red-200 text-sm font-bold">Not tax advice</p> <p class="text-slate-300 text-xs mt-1 leading-relaxed"> This post assumes you are a U.S. taxpayer reporting rental income on Schedule E and that you paid contractors in the ordinary course of managing rental property. It does not account for your specific entity structure, state information-return requirements, or legislation enacted after July 2026. Tax rules change and depend on your specific situation. Talk to a licensed CPA before acting on anything here, and confirm current figures on IRS.gov. </p> </div> </div> </div>