As you prepare for the 1099 filing season, note the changes effective under The One Big Beautiful Bill Act (OBBB) for the 2025 tax year:

• Form 1099-NEC and 1099-MISC: The filing threshold of $600 will remain for the tax year 2025. The new bill increases the filing threshold for 1099-NEC Non-Employee Compensation and 1099-MISC to $2,000 for payments made during a calendar year on or after Jan. 1, 2026. Starting in 2027, the $2,000 threshold will be adjusted annually for inflation. Excess golden parachute payments are no longer reported on Form 1099-MISC. They must now be reported on Form 1099-NEC, Box 3 for 2025. 
• Form 1099-K: Beginning in 2024, The American Rescue Plan Act of 2021 (ARPA) reduced the Form 1099-K minimum threshold requirement for reporting payments from online sellers and third-party platforms, such as Venmo and PayPal to gross amount of reportable payments of $5,000 or more with no restriction relating to the number of transactions for tax year 2024. Effective for tax year 2025 (filings in January 2026), the OBBB reinstates the pre-2024 threshold of $20,000 in gross payments and 200 transactions per year. A 1099-K will be received if both criteria are met. 
• Form W-2: No planned changes to the W-2 format for 2025. Existing boxes remain unchanged. The IRS will release instructions on how businesses may track and report qualified overtime compensation and tips to employees for 2025 to meet the reporting requirements. The IRS released a draft for the 2026 Form W-2 that includes new boxes and codes for reporting qualified tips and qualified overtime compensation. 
• Form W-9: A draft form W-9 has been released by the IRS that includes clarification of the requirement that sole proprietors must provide their own SSN’s instead of EINs of their sole proprietorships or disregarded entities. Line 1 should include the Owner’s name, Line 2 Business/disregarded entity name, and Box 3a should be checked according to the federal tax classification of the entity/individual name entered on line 1. Also added is a new box and new exempt payee code for U.S. Digital Asset Brokers to sign and certify that it is a U.S. digital asset broker claiming exemption from information reporting. 
• Tax relief for worker compensation of overtime pay and tip income: Beginning Jan. 1, 2025 through Dec. 31, 2028, qualified overtime compensation and tip income are to be reported to employees for the 2025 tax year and eligible for an annual deduction, subject to income and maximum deduction thresholds, on the employee’s Form 1040 Individual tax return. Only the pay difference between the overtime rate over the base hourly rate (50% premium) per hour is eligible for the deduction. 
  • To be eligible for the tip deduction, tips must be voluntary and received in an occupation included in a list released by the IRS. The IRS has published a preliminary list of eligible tip-based occupations(Opens a new window) where workers customarily and regularly receive tips as well as exclusions from the deduction. See W-2 reporting above. 
  • The IRS has provided transition relief on imposed penalties for not separately reporting qualified tips, occupation codes, and qualified overtime compensation due to system limitations and lack of updated forms. This applies only to tax year 2025. Employers are encouraged (not required) to provide a separate accounting of tips, occupation codes, and overtime to employees either in written statements, through online portals, or in Box 14 on Form W-2 (for overtime).
• Electronic filing requirements and online portal: Small to mid-size businesses can file Forms 1099 on the IRS free online portal, IRIS(Opens a new window)(Opens a new window)(Opens a new window). Enrollment is required for the IRIS platform and usually takes up to 45 days for the IRS to issue you a Transmitter Control Code. As of January 2024, you are no longer able to electronically file using your legacy transmitter code using the FIRE system and must complete an application for a new FIRE TTC. For the 2025 tax year, you can still electronically file 1099s through the IRS FIRE system, but this will be the final year the FIRE system is available. For 2026 year-end (Filed in 2027), you must use the new IRIS system. 
  • Many states participate in the Combined Federal/State Filing Program. The IRS will automatically forward 1099 information to participating states, eliminating the need to file separately with these states. You will have to refer to state 1099 filing instructions to understand your stateʼs requirements.
• TIN Matching Requirement: For the 2025 filing season the IRS continues to strictly enforce that the recipient’s name and tax ID (TIN/SSN) must match IRS records. If there is a mismatch, the 1099 will be rejected. Corrected forms must then be submitted by Feb. 2, 2026 to avoid penalties. 

Read on for additional important information and deadlines.

Employer requirements

Form 1099-NEC

Report payments of $600 or more made to nonemployee service providers, such as independent contractors, consultants, accountants, cleaning professionals, landscapers, and other self-employed individuals, as well as nonincorporated entities, which includes any partnership, limited liability company (LLCs), limited partnership (LP), or estate. This also includes professional fees paid to attorneys (including law firms established as corporations).

• Report backup withholding.

• Payments to attorneys of $600 or more paid in the course of a trade or business are reportable in box 1 of Form 1099-NEC. Learn more in the “Gross proceeds paid to attorneys” section below.

Form 1099-MISC

Report all other types of miscellaneous compensation paid in the amount of $600 or more made in your ordinary course of trade or business, such as rents, prizes and awards, certain medical and healthcare payments, and other income, as well as royalties paid over $10.

Gross proceeds paid to attorneys

Under section 6045(f), report in box 10 payments that:

• Are made to an attorney in the course of your trade or business in connection with legal services, but not for the attorneyʼs services, for example, as in a settlement agreement;
• Total $600 or more; and
• Are not reportable by you in box 1 of Form 1099-NEC.

Electronic filing requirement

The IRS has implemented electronic filing requirements mandating businesses that file 10 or more returns in a calendar year – previously more than 250 – must file electronically effective for returns required to be filed on or after Jan. 1, 2024. Paper filing is no longer an option. Filers must aggregate almost all return types covered by the regulation to determine whether they meet the 10-return filing threshold. (This includes such forms as W-2s, 1099s, and other business return types.)

Extensions

While the IRS allows an automatic 30-day extension for certain Forms 1099, there are very limited circumstances for requesting an extension for Forms W-2 and 1099-NEC. You can use Form 8809 for filing an extension if you qualify. The extension covers the IRS copy only and not the recipient copy. Contact your CohnReznick engagement team or other trusted tax advisor with any questions.

Penalties

Failure to comply with the various filing deadlines and requirements may expose a business to the following significant penalties:

• Failure to file the correct information returns or furnish the correct payee statements by the due date:
  • Small businesses (average annual gross receipts of $5 million or less for the most recent three taxable years): $60-$340 per recipient, depending on when you file/furnish, with a maximum penalty of $1,366,000 per year.
  • Large businesses (average annual gross receipts of more than $5 million): $60-$340 per recipient up to a maximum of $4,098,500 per year.
• For failure to provide a correct information return or payee statement due to intentional disregard, the penalty is at least $680 per Form 1099 or statement with no maximum penalty.

If you have received Form 1099 non-matching notices from the IRS, be vigilant and follow up with your vendors or you may be penalized for the maximum amount per incorrectly filed recipient.

2025 due date summary chart

_{*The due date for submitting to the IRS is the same as for providing it to the recipient, regardless of whether filing by paper or electronically.
**Submission to the IRS if filing by paper is March 2, 2026. Allowed only if payer issues <10 total information returns.}

Important calendar reminder

To timely prepare and e-file your forms, provide your data to your tax team by Jan. 15, 2026.