The 2025–2026 1099-NEC Threshold Change: What to Do in QuickBooks Online

A change is coming to 1099-NEC reporting, and the reporting threshold itself is a moving number you should confirm with your CPA. The good news for your books: the bookkeeping work to get ready is the same no matter where the threshold lands, and doing it now in QuickBooks Online is what keeps January from turning into a scramble.

Here is what is changing in plain terms, and the setup that makes your year-end 1099s accurate — all of it bookkeeping, none of it tax advice.

What is changing

The reporting threshold for the 1099-NEC (and the 1099-MISC) is increasing for payments made in 2026, which you would report in early 2027. Payments made during 2025, reported in early 2026, still follow the prior, lower threshold. So this is a two-season story: the old rule for your upcoming filing, the new rule for the year ahead.

The exact dollar figures, and which vendors are required to receive a form, are tax questions — confirm those with your CPA or the current IRS instructions. What we handle is the bookkeeping underneath: making sure QuickBooks Online can produce an accurate 1099 report whatever threshold applies.

Why the bookkeeping matters more than the number

QuickBooks Online only produces a correct 1099 report if your vendors are flagged and your payments are tracked correctly all year. Two businesses with identical spending can produce completely different 1099 reports if one file is set up right and the other is not. The threshold decides who crosses the line; your bookkeeping decides whether the totals behind that line are even accurate. Getting the setup right is a core part of our monthly bookkeeping services.

Getting QuickBooks Online ready

Collect a W-9 before you pay a new vendor. The W-9 gives you the legal name, address, and taxpayer ID you need to issue a 1099 later. Chasing it down in January, after the work is done and the vendor has moved on, is the hardest part of the whole process — so make it a condition of the first payment.

Flag each eligible vendor for 1099 tracking. In the vendor's record in QuickBooks Online, turn on 'Track payments for 1099.' Only vendors with this box checked flow into the 1099 report, so a vendor that was never flagged simply will not appear, no matter how much you paid them.

Map your accounts to the right 1099 box. When you run the Prepare 1099s flow, QuickBooks Online asks you to map each expense or cost-of-goods account to the correct 1099 box, such as nonemployee compensation. Payments coded to an unmapped account drop out of the report, which is a common reason a contractor's total comes up short.

Record the payment method accurately. Payments made by credit card, debit card, or a third-party network are reported by the card processor or network on a 1099-K, not on your 1099-NEC. QuickBooks Online excludes those automatically only if the payment is recorded with the right method — so a card payment miscoded as a check can double-report a vendor. Accurate payment methods keep that from happening.

Review the report before anything is filed. Run the 1099 report or step through Prepare 1099s and read each vendor's total against what you know you paid. This review is where missing W-9s, unflagged vendors, and miscoded payments surface while there is still time to fix them.

What a cleanup catches before January

If your vendor list has grown all year without much upkeep, a year-end review usually turns up the same handful of issues: contractors paid but never flagged for 1099 tracking, missing W-9s, payments split across two or three accounts so no single total looks large enough to notice, and card payments miscoded as checks. During a QuickBooks Online cleanup, we flag the right vendors, correct the miscoded payments, and reconcile each contractor's total so the 1099 report reflects what actually happened. The reporting rules stay with your CPA; the accurate books stay with us.

Frequently asked questions

Did the 1099-NEC threshold change? Yes. The reporting threshold is increasing for payments made in 2026, reported in early 2027, while payments made in 2025 still follow the prior threshold. Confirm the exact figures and filing requirements with your CPA or the current IRS instructions.

Does QuickBooks Online file my 1099s for me? QuickBooks Online can prepare and e-file 1099s through its Prepare 1099s flow, but only from the vendor and payment data already in your file. Accurate setup throughout the year is what makes that filing correct.

What is the one thing to do now? Collect W-9s and flag your 1099 vendors in QuickBooks Online before year-end, so the report is accurate whatever threshold ends up applying.

QBO Cleanups brings Advanced QBO ProAdvisor certification and 20+ years of bookkeeping experience to year-end vendor and 1099 setup. If you want your contractor tracking cleaned up before filing season, book a call and we will get your file ready.