Restaurants file 1099-NEC only at $2,000 for 2026 payments

Last January your bookkeeper probably sent a 1099 to everyone you paid $600 or more: the DJ, the plumber, the knife sharpener, the consultant who rewrote the brunch menu. The pile for 2026 payments should be shorter. The threshold for most of those forms is now $2,000.

Not every line moved, though. The attorney box didn't, card payments were never supposed to be on the pile, and at least one state kept the old number. None of this is tax advice; it's the published rule as of early November 2026.

The threshold is $2,000 for payments made in 2026

The One Big Beautiful Bill Act, signed in July 2025, rewrote section 6041(a) of the tax code to require a return for payments of "$2,000 or more in any calendar year," up from $600. It applies to payments made after December 31, 2025. So the first forms it changes are the ones you file in early 2027, not the ones you filed this year. Starting with calendar 2027, the $2,000 is indexed for inflation and rounded to the nearest $100.

The IRS's instructions for Forms 1099-MISC and 1099-NEC (revision December 2026) put it plainly for box 1a: "Enter nonemployee compensation (NEC) of $2,000 or more." A 1099-NEC is required when four things are true:

• the payee isn't your employee;
• you paid for services in your trade or business;
• the payee is an individual, a partnership, an estate or, in some cases, a corporation;
• you paid that payee at least $2,000 during the year.

Backup withholding moved with it. The same law tied the withholding trigger to the new threshold, as the IRS confirms in Rev. Proc. 2025-32. The rate is still 24% when a payee won't give you a taxpayer ID. That's why I wouldn't drop the W-9 for small vendors. You don't know the year's total when you write the first check, and a vendor who looked occasional in March can cross $2,000 by December.

States don't have to follow. Wisconsin's Tax Bulletin 234 (July 2026), as quoted in the excerpt I could find, keeps state reporting when "non-wage payments for services in the state exceeded $600," and state law can disallow the deduction for unreported payments over $600. If you operate in more than one state, check each one before you trim the list.

Who gets one from a restaurant

The test is the payee's total for the year, paid by cash, check or ACH, to a payee that isn't a corporation (lawyers excepted, below). A few common cases, applying the IRS conditions above:

The merchandise line matters for caterers. The IRS instructions say payments for merchandise, freight, storage and similar items are generally not reportable. A bakery selling you cakes sells goods. A pastry chef hired for a day of plating sells a service.

Rent follows the new number too: the instructions set box 1 at $2,000 for all types of rent. If you pay through a real estate agent or property manager, the manager reports it, not you. Royalties are the outlier at $10, which almost no restaurant pays.

The 2026 form also adds boxes 1b (cash tips), 1c (tipped occupation code) and 1d (qualified overtime). Most restaurants won't need them, since tipped staff are employees; the no-tax-on-tips post covers the W-2 side.

Lawyers are the exception that didn't move

Payments to lawyers land in two places, and they now have different thresholds.

Attorney fees go on a 1099-NEC, box 1a, at $2,000, the same as any other service. Gross proceeds paid to an attorney go on a 1099-MISC, box 10, and that threshold is still $600: "Enter gross proceeds of $600 or more paid to an attorney in connection with legal services." That reporting rule sits in a different section of the code, which the 2025 law didn't amend. Gross proceeds are money paid to a lawyer that isn't the lawyer's own fee; the IRS's own example is an insurer paying a claimant's attorney to settle a claim.

The corporate exemption doesn't help here either. The IRS instructions say it doesn't apply to payments for legal services. If your restaurant's law firm is a professional corporation, it still gets a 1099-NEC once its fees reach $2,000.

Card and network payments come off the list

If you paid the DJ by credit card, or through a third-party payment network that reports the payment on Form 1099-K, that payment doesn't belong on your 1099-NEC at all. The IRS instructions say those payments are reported by the payment settlement entity and "are not subject to reporting on Form 1099-MISC or Form 1099-NEC."

The 1099-K rules changed as well. The 2025 law put the threshold for payment apps and marketplaces back to more than $20,000 and more than 200 transactions in a year, the test that existed before the 2021 changes. The IRS's 1099-K FAQ says a payee should get one for a payment card transaction of any amount; the $20,000 and 200 floor is written for payment apps and marketplaces.

Processors publish their own reporting rules, and some states require lower floors. Square's help page says that from 2025 on it issues 1099-Ks at more than $20,000 and more than 200 transactions in most states, but at $600 or more in DC, Maryland, Massachusetts, Vermont and Virginia, at more than $1,000 and more than three transactions in Illinois, and at $1,200 or more in Missouri.

The practical point is on your side of the ledger. To apply the $2,000 test you need each payee's total split by payment method: cash, check and ACH in one column, card and third-party network payments in another. Only the first column counts toward your 1099. Not every app is a third-party network, so ask your accountant which ones you used qualify.

The deadline is Monday, February 1, 2027

The 1099-NEC is due January 31 to both the IRS and the recipient, and Publication 1099 says there's no automatic extension. When a due date falls on a Saturday, Sunday or legal holiday, it moves to the next business day. January 31, 2027 is a Sunday. By my calendar, that makes the due date Monday, February 1.

Don't plan around the extra day. A form that misses Monday is late, and the penalty clock below starts.

How you file depends on a count. "If you are required to file 10 or more information returns during the year, you must e-file." The count is across all form types combined, not per form. As I read the 2023 regulation behind it, Forms W-2 count too, which would put almost any restaurant with a staff over the line. Ask whoever runs your payroll how they count yours.

What a late or missing 1099 costs

The penalties for returns due in 2027, from Rev. Proc. 2025-32, rise with how long the failure goes uncorrected. These are the figures for a business whose average annual gross receipts over its three most recent tax years were $5 million or less:

The 30-day and August 1 cutoffs are in the statute, section 6721. Above $5 million in receipts the per-return amounts are the same and the caps are higher. A separate penalty, under section 6722, covers the copy you owe the payee and mirrors these amounts. A form that never reaches either one can be penalized twice.

A 1099 doesn't make anyone a contractor

Sending someone a 1099-NEC records a payment. It doesn't decide whether that person was an employee.

The rules on that question are unsettled. The Labor Department's 2024 independent-contractor rule is still on the books, though the department said in May 2025 it would stop applying it in enforcement. A proposal to replace it with a test closer to the 2021 version was published on February 27, 2026, and comments closed April 28. As of this writing I found no final rule on the Labor Department's rulemaking page. The IRS applies its own common-law test based on control, and many states use a stricter ABC test.

Servers and bartenders who work your events every week, on your schedule, under your captain, are a classic misclassification risk however they're paid. The event staffing post covers what happened to staffing apps that tried it.

If you invoice corporate clients for catering, you're the payee, and buyers will still ask for your W-9, as the vendor onboarding post explains.

What I'm not going to give you

The 2027 threshold. The law indexes the $2,000 starting with 2027 payments, but as of this writing the IRS hasn't published the adjusted figure.

A list of states that kept $600. Wisconsin is the only one I found in a state's own guidance. Payroll vendors name others, and I couldn't confirm them from the state revenue departments.

How many restaurants misclassify event staff. I looked for industry data and found nothing I'd stand behind.

What to do

1. Pull a vendor report for 2026 by payee and payment method, and drop everything paid by card or through a third-party network before applying the $2,000 test.
2. Flag every payment to a lawyer and sort fees (NEC, $2,000) from gross proceeds (MISC box 10, $600).
3. Keep collecting W-9s before the first payment, whatever the amount. File them with your tax records; the record retention post covers how long to keep those.
4. Check each state you operate in for its own threshold.
5. Count your total information returns, including W-2s as I read the rule, and set up e-filing if you're anywhere near 10.
6. Put February 1, 2027 on the calendar for the 1099-NEC IRS filing and all recipient copies, except box 8 or 10 copies (Feb. 16); 1099-MISC IRS copies follow in March.

Disclosure: I work at Katalyst, which sells restaurant POS and catering software with accounting integrations for QuickBooks, Xero, Sage Intacct and NetSuite. The 1099s come from your books, not your POS, and the books are only as good as the payee and payment method recorded on every payment you made.

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