1099 Contractor Invoicing: What to Include and the New $2,000 Threshold

If you work as an independent contractor in the US, you'll hear "1099" a lot. It refers to the forms businesses file with the IRS to report payments to non-employees. Here's how it connects to your invoices, and what changed for payments made in 2026.

This is general information, not tax advice. Check IRS guidance or a tax professional for your situation.

The short version

• Your invoice doesn't need any special 1099 wording.
• Your client may ask you for a Form W-9 so they have your name and taxpayer identification number (TIN).
• If a client pays you $2,000 or more during calendar year 2026 for services (the threshold was $600 for payments through 2025), they generally must file a Form 1099-NEC and send you a copy by 31 January of the following year.
• You must report all your income whether you receive a 1099 or not.

What changed in 2026

The One Big Beautiful Bill Act, signed in July 2025, raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000 for payments made after 31 December 2025, with inflation adjustments after 2026. That means fewer 1099s for contractors with small clients, but no change to what you owe: self-employment income is taxable from the first dollar (subject to the normal rules).

Practically, keep your own records rather than relying on 1099s to tell you what you earned. You'll receive fewer of them.

What goes on a 1099 contractor's invoice

The same things as any business invoice:

• Your name or business name, address, email
• The client's legal business name and address
• Invoice number and date
• Description of services, dates, hours or deliverables, rates
• Total, payment terms and due date
• How to pay

What not to put on the invoice: your Social Security number. If you don't have an EIN, give your SSN only on a W-9 sent through a secure channel. Many contractors get a free EIN from the IRS precisely so they can put a business tax ID on paperwork without exposing their SSN.

About Form W-9

A W-9 is how a client collects your TIN and confirms your tax classification (sole proprietor, LLC, S corp and so on). Send it once, when you're onboarded, not with every invoice. Don't email it as an unencrypted attachment if you can avoid it; use the client's secure vendor portal or an encrypted method.

If you don't provide a W-9 when asked, a client may be required to apply backup withholding (currently 24%) to your payments.

Payment methods and 1099-K

If clients pay you through a card processor or a third-party payment network, those payments may be reported on Form 1099-K by the payment company rather than on a 1099-NEC by the client. The 1099-K threshold for third-party networks was reset to $20,000 and 200 transactions by the same 2025 law. Either way, income is income; the forms are just reporting.

Sales tax

Most services provided by independent contractors aren't subject to sales tax, but some are, depending on the state. See sales tax on invoices.

Estimated taxes

As a contractor, nobody withholds income tax or Social Security and Medicare for you. You'll generally need to pay quarterly estimated taxes (Form 1040-ES). A common habit is to move a fixed percentage of each paid invoice into a separate account for taxes. The right percentage depends on your income and state; many contractors set aside 25–30% as a starting point and adjust with their accountant.

Records to keep

• Every invoice you send
• Proof of payment (bank records)
• W-9s you've provided
• 1099s you receive
• Business expense receipts

The IRS generally expects records supporting your return to be kept for at least three years, longer in some cases. See how long to keep invoices.

If you hire contractors yourself

The other side of the coin: if your business pays a contractor $2,000 or more in 2026 for services, collect a W-9 before paying them, and file a 1099-NEC by 31 January 2027. Payments to corporations are generally exempt, with some exceptions (for example, attorneys).