The short answer
Review contractor payments against the IRS rules for the payment year, recipient and payment method. The federal general reporting threshold for qualifying nonemployee service payments rose to $2,000 for payments after December 31, 2025; exceptions still matter.
On this page
Collect records before year-end
Obtain the appropriate tax information securely, track payments by recipient and separate payment methods. Confirm whether payments were made in the course of a trade or business and whether an exception applies.
Avoid duplicate reporting
Payment-card and qualifying third-party network payments have separate reporting rules. Do not simply report every bank outflow on Form 1099-NEC. Check current filing, furnishing and state requirements with your preparer.
Example: split payment methods
A vendor receives a check and a card payment. Review each payment stream under the applicable rules before calculating the reportable amount. Preserve the reconciliation so the preparer can see why the total differs from the expense ledger.
References and next steps
Use these references for the specific topic they cover. Local requirements and individual circumstances may differ.
The Rentari team writes and updates this guide. Examples illustrate decisions and do not describe customer results. This is general education. Confirm the rules and treatment for your property with a qualified local professional. Found an error or an unclear step? Send a correction with a link to this page and the wording you’d change.
