We work with many construction firms and contractors throughout Florida. If you are in the construction or trades industries, chances are you pay other contractors! Here's some good news. The recent tax bill that went into effect (dubbed The One Big Beautiful Bill Act) includes some significant changes to 1099 reporting requirements that will affect how and when you file forms with the IRS.

While not all of it is relevant to small business owners trying to keep in compliance, here are some key things to think about:

1099-MISC/1099-NEC Reporting Threshold Is Increasing

If you pay a contractor $600 or more in a year, you must file a 1099-NEC or 1099-MISC to report those payments. That's about to change:

New Threshold: $2,000

• Starting next year, the reporting threshold will rise from $600 to $2,000 per contractor per year.

• You will only need to file a 1099 if total payments to a contractor equal or exceed $2,000 during the calendar year.

Indexed for Inflation

• Additionally, the Threshold will be automatically adjusted each year for inflation in future years, rounded to the nearest $100.

What does this mean for you?

• For 2024 and 2025, the old $600 rule for 1099-NEC still applies—so continue filing based on current law.

• Plan for 2026 by reviewing your contractor payment processes and updating your accounting systems to track payments against the new $2,000 threshold.

Keep in mind:

• Before paying any contractors or vendors, you should still collect their W-9 ahead of time. Not only is this best practice, but getting this vital document before paying your contractor can be easier than after.

• Make this part of your standard process for working with subcontractors, collecting payment information, etc.

• Work with your bookkeeper or accounting service throughout the year to track any missing W-9s!

Don't already have an accountant or tax preparer? Feel free to schedule a call to see if we'd be a good fit for you.