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1099-NEC vs. 1099-K: What's the Difference, and What Changed for 2026?

Last reviewed October 2026 by the 1099tax.app team. These tools give estimates, not tax or legal advice.

If you earn money on your own, you've probably received a Form 1099 in the mail, or wondered why you didn't. Two of these forms cause the most confusion: Form 1099-NEC, which clients send to report what they paid you for services, and Form 1099-K, which payment apps, marketplaces and card processors send to report payments they handled for you. Both thresholds changed recently. This guide explains which form you'll get, when, and what to do with it.

One rule doesn't change: income is taxable whether or not you receive a form. The thresholds decide who has to send a 1099, not what you owe.

Form 1099-NEC: payments for your services

A business that pays you, an independent contractor, for services generally reports those payments on Form 1099-NEC (“nonemployee compensation”). Under the 2025 tax law (P.L. 119-21), for payments made after December 31, 2025, the reporting threshold rises from $600 to $2,000 a year per payee. The IRS says the threshold will be adjusted for inflation each year after 2026. The same $2,000 threshold applies to many Form 1099-MISC payments, such as rents.

So for work you do in 2026:

  • A client who pays you $1,500 in 2026 generally doesn't have to send you a 1099-NEC.
  • A client who pays you $2,500 generally does, by January 31, 2027.
  • Either way, you report all of it on Schedule C.

Backup withholding: if you don't give a client your correct taxpayer ID (on Form W-9), they may have to withhold 24% of your payments for the IRS. For 2026 that applies to payments above the new $2,000 threshold.

Form 1099-K: payments through cards, apps and marketplaces

Form 1099-K reports the gross payments you received for goods or services through:

  • Payment cards (credit, debit, gift cards), through the merchant's card processor. There is no minimum. Even one card payment can be reported.
  • Third-party settlement organizations (TPSOs), such as payment apps and online marketplaces.

For TPSOs, the 2025 law retroactively restored the old threshold. A payment app or marketplace doesn't have to file a 1099-K unless your payments for goods or services exceed $20,000 and more than 200 transactions in the calendar year (IRS Fact Sheet 2025-08). The planned drop to $600 never took effect.

Some states require 1099-Ks at lower thresholds, so you may still receive one below the federal level. Platforms can also choose to send one anyway.

Personal payments don't count. Money from friends and family for a shared dinner, rent split or gift isn't payment for goods or services and shouldn't be reported on a 1099-K. If it was, keep records showing what the payments really were.

Side by side

1099-NEC1099-K
Who sends itThe business that paid youA card processor, app or marketplace
What it reportsPay for servicesGross card and app payments for goods or services
2026 threshold$2,000 per payer (payments after 2025)Cards: any amount. Apps/marketplaces: over $20,000 and over 200 transactions
Includes fees and refunds?Reports what was paid to youGross amount, before fees, refunds and shipping

A worked example

A graphic designer's 2026 income:

  • Client A paid $8,000 by bank transfer: 1099-NEC (over $2,000).
  • Client B paid $1,800 by bank transfer: no 1099-NEC (under $2,000), but still taxable.
  • Marketplace sales of digital templates: $14,000 across 350 sales through an online platform. That's over 200 transactions but not over $20,000, so no federal 1099-K is required. Some states may require one.
  • Client C paid $3,000 by credit card through the designer's card processor: 1099-K for $3,000, with no minimum.

Total income to report: $8,000 + $1,800 + $14,000 + $3,000 = $26,800, less platform fees and business expenses on Schedule C.

The double-counting trap: if Client C had paid by card and also sent a 1099-NEC, the same $3,000 could appear on two forms. Generally, payments made by card or through a payment app should be reported only on the 1099-K, not on a 1099-NEC. Report the income once and keep a reconciliation showing how the forms tie to your books.

What to do when a form arrives

  1. Check the amounts against your records. Errors are common, especially on 1099-Ks, which show gross figures.
  2. Ask the issuer to correct a wrong form. If they won't, report the correct figures and keep your records.
  3. Reconcile gross to net. For a 1099-K, subtract refunds, platform fees and shipping on your return, and keep the support.
  4. Report the income on the right schedule. Business income goes on Schedule C. A personal item sold at a loss isn't taxable, but may need to be reported to explain the 1099-K.
  5. Use the numbers to set your quarterly payments. A rising 1099 total is a sign your estimated taxes should rise too.

Common mistakes

  1. Only reporting income that came with a form. The IRS expects all of it.
  2. Reporting the same money twice from an overlapping 1099-NEC and 1099-K.
  3. Reporting the 1099-K gross as profit without subtracting fees, refunds and costs.
  4. Not sending a W-9, which can trigger 24% backup withholding.
  5. Assuming $600 still applies to 1099-NEC for 2026 payments.
  6. Ignoring state 1099-K rules that may be stricter than federal ones.

Frequently asked questions

Yes. All self-employment income is taxable, with or without a form.

Related tools

Sources

These tools give estimates, not tax or legal advice.

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