How to File Multiple 1099s: A Step-by-Step Guide for Employers

If you’re running a business that frequently works with freelancers, contractors, consultants, or vendors, you need to know how to file multiple 1099s. These are staple information return forms used to report various nonemployee payments to the IRS. There are many different types of this form, each serving a unique purpose.

This article explores these types and 1099 filing requirements. We’ll explain when you are required to file multiple 1099s and show you how to do it with a step-by-step guide. Also, we’ll go through some of the most common mistakes business owners make and the potential penalties they face.

What Is Form 1099?

Form 1099 represents a series of information returns used to document and track various income paid to individuals or entities outside traditional employment. For instance, a common variant many employers are familiar with would be Form 1099-NEC, used for nonemployee compensation.

A notable dilemma for many small business owners is whether to issue a Form 1099 or Form W-2. While both are year-end tax forms, the choice depends on the relationship between the payer and the payee.

Form W-2 is used to report wages paid to employees and for employer tax reporting, while Form 1099 is used for payments to nonemployees (typically freelancers or contractors).

Here’s a brief table that outlines the key differences when comparing 1099 vs. W-2:

Types of 1099 Forms

There are more than 20 types of Form 1099, though most employers and businesses interact with a select few.

Here are the most relevant types you should be familiar with:

• Form 1099-NEC, Nonemployee Compensation: This is one of the primary independent contractor tax forms used to document and report payments for rendered services. It’s issued if payments to a single contractor reach at least $600 in a year.

• Form 1099-MISC, Miscellaneous Information: This form is used for payments in cumulative amounts of $600 or more that aren’t for services (e.g., rent, prizes, awards, legal settlements).

• Form 1099-INT, Interest Income: 1099-INT is required if your business paid at least $10 in a year in interest to another party.

• Form 1099-DIV, Dividends and Distributions: This form is used by corporations that need to report dividends or capital gains distributions paid to shareholders in amounts of at least $10 in a year.

• Form 1099-K, Payment Card and Third Party Network Transactions: 1099-K is primarily used by third-party settlement organizations (TPSOs) (e.g., PayPal) to report payments through them. If you use one of these platforms, you generally don’t issue Form 1099 to avoid double-reporting the income.

When Are You Required to File Multiple 1099 Forms?

You are required to file multiple Forms 1099 in two main instances:

• Your business hired and paid more than one vendor or independent contractor in a single year.
• Your business paid two or more different types of income to a vendor or a contractor.

The first scenario is usually more frequent. For example, if a business pays a graphic designer, a copywriter, and a marketing expert each more than $600 in a single year, they must issue separate Forms 1099-NEC for all of them.

The second scenario can be more complex. It involves issuing different types of Form 1099 at the same time. For example, a business owner may simultaneously pay:

• Freelance web developer $3,000 for their services (which mandates Form 1099-NEC).
• Landlord $1,200 in rent (which mandates Form 1099-MISC).
• Lender $100 in interest (which mandates Form 1099-INT).

Each of these payments (even if some of them are made to the same individual or entity) requires a distinct form because the IRS categorizes these types of income differently for tax purposes.

Another aspect that’s important to consider is the method of payment. You’re required to issue these Forms 1099 if you’re making these payments with cash, check, or direct bank transfer. However, the circumstances may change if you’re using credit cards or third-party settlement organizations, like PayPal, Venmo, or Stripe.

Since these organizations act as payment processors, they are legally required to issue Form 1099-K. In these cases, you generally shouldn’t issue a Form 1099 yourself, as that would result in double-reporting the income to the IRS.

Step-by-Step Guide to Filing Multiple 1099s

Filing multiple 1099s increases the complexity of the process, which is why it’s important to have a systematic approach and to be precise. Here’s a step-by-step guide to help you optimize efficiency and minimize mistakes:

#1. Gather Contractor Information

The first and foundational step involves gathering the information you need to fill out and file Form 1099. In general, you need to collect Form W-9, Request for Taxpayer Identification Number and Certification, from each contractor or vendor for whom you need to file Form 1099.

This will give you the essential details required to fill out the form, such as the contractor’s or vendor’s legal or business name, mailing address, and Taxpayer Identification Number (TIN). TIN is usually either a Social Security Number (SSN) or an Employer Identification Number (EIN).

It’s important to collect Form W-9 ahead of time and not wait until January, as this can lead to missed deadlines. Moreover, make sure the information is properly updated if you’ve been collaborating with the same vendor or contractor and using their old Form W-9.

#2. Calculate Total Payments for Each Contractor

Once you’ve gathered all the necessary information, you need to sum all the payments made to every contractor between January 1 and December 31. Remember that the $600 filing threshold for Form 1099 refers to the total amount paid to a contractor, and not a single payment.

Apart from that, it’s important to exclude payments that don’t need to be reported, such as reimbursed expenses that are properly issued under an accountable plan. Finally, make sure to look at the date of payment, and not at the invoice date.

#3. Complete Each 1099 Form Accurately

Since you need to complete a unique Form for each recipient and every time there’s a different type of payment, you need to pay attention not to mix things up.

You must never combine multiple recipients or different types of payments onto a single form. This will automatically trigger a mismatch in IRS systems and cause bigger problems in the future.

Double-check every detail that you’ve included in every form, including the dollar amounts and the recipient’s information. Even a single typo (like a wrong character in the name or TIN) can result in receiving a “B-Notice” (e.g., CP2100 or CP2100A Notice) from the IRS, leading to a lengthy process of correction.

#4. File 1099s With the IRS

After accurately completing Forms 1099, you must submit Copy A to the IRS. While paper filing is an option, and it’s used for small volumes of Forms 1099, electronic filing is much more convenient.

Keep in mind that electronic 1099 filing is mandatory if you have to file 10 or more returns in a single tax year. This includes not just Forms 1099, but many others, as well (e.g., if you’re also filing Form W-2, 1098 series, 5498 series, etc.).

E-filing can be done through the Filing Information Returns Electronically (FIRE) system and the Information Returns Intake System (IRIS). The FIRE system can still be used, but it’s scheduled to be retired in the 2027 filing season.

#5. Send Copies to Contractors

In addition to sending Copy A of every Form 1099 to the IRS, you must also send Copy B to each contractor. This should be done before January 31 to give contractors enough time to complete and file their own tax returns.

These copies can also be delivered via mail or electronically. However, if you choose the electronic route, you need consent from the recipient that they want to receive their Form 1099 in a digital format.

Still, most businesses and contractors prefer the electronic method, as it is quick, eliminates the risk of losing documents in the mail, and creates an immediate digital trail in case of an audit or dispute.

Filing Multiple 1099s Electronically vs. By Mail

Filing paper Forms 1099 by mail used to be standard in the past, but it is increasingly being replaced by electronic filing due to improved efficiency and accuracy.

In 2024, the IRS lowered the threshold for electronic filing from 250 to 10 returns, allowing businesses to file multiple 1099s by mail only if there are fewer than 10. Filing paper documents if you are over the limit will likely result in rejections and penalties.

Here is a table that compares the two methods of filing Forms 1099:

6 Common Mistakes When Filing Multiple 1099s

Accurately filing multiple 1099s is not difficult once you understand the challenges, though there are still some mistakes that you can easily make due to a lack of attention or knowledge. Here are the most common ones:

1. Missing contractors. When you have to file numerous Forms 1099, you may end up forgetting one of the contractors. For instance, many employers don’t adequately track payments made via check or cash, as they aren’t automatically recorded in a digital format. Still, a Form 1099 is mandatory if a payment exceeds $600.
   
   
2. Using the wrong 1099 type. Another common error businesses make is using Form 1099-MISC for contractor services. If you’ve been working with a contractor and paid their service invoice, you must report it using Form 1099-NEC.
   
   
3. Inputting incorrect tax IDs. Making a typo when entering a recipient’s tax ID number will render the form incorrect. Moreover, you can make a mistake of using an SSN of a contractor who uses an EIN, or vice versa. Both can trigger a mismatch penalty, making it critical to verify the recipient’s TIN via their current W-9.
   
   
4. Filing late. The IRS is strict with deadlines, and even filing your forms one day late will likely result in penalties. For example, the Form 1099-NEC filing deadline is on or before January 31, and missing the deadline will trigger an automatic penalty that is on a per-form basis.
   
   
5. Combining multiple contractors on one form. You mustn’t combine multiple contractors on one Form 1099. Each recipient must have a unique form for every type of payment.
   
   
6. Not keeping payment records. The IRS recommends keeping copies of all payment records and filed Form 1099s for at least three years. This is critical documentation to have in case of an audit or a dispute.

Penalties for Incorrect or Late 1099 Filing

As previously mentioned, penalties for incorrect or late 1099 filing are on a per-form basis.

The IRS is strict with the deadlines and uses a tiered penalty system to enforce business tax compliance and timely filing. The penalties increase with the number of forms that have been filed incorrectly or late, and with the number of days after the IRS 1099 filing deadline.

For Forms 1099 that are due in 2026, the penalties are as follows:

• $60 per form if you’re late up to 30 days.
• $130 per form if you’re late 31 days or more, up until August 1.
• $340 per form if you file after August 1, or not at all.

An additional criterion the IRS uses to determine the minimum penalty is whether the error was unintentional or a result of “intentional disregard.” Willful noncompliance belongs in a separate category, as the penalties are much higher. Minimum penalty for intentional disregard is $680 per form.

Streamline Your Filing With Paystub.org

Creating accurate and professional 1099s is the main prerequisite to successful filing, and Paystub.org can help you do that with ease. We developed specialized software that minimizes the chances of errors due to manual input and significantly speeds up the creation process.

The process is simple and goes as follows:

• Go to our Form 1099 generator.
• Fill out the form with the required information.
• Preview the document to see if everything is in order.
• Download it after checking out.

If you need additional documentation as a self-employed professional or a small business owner, we also offer:

• Pay stub generator
• Form W-2 generator
• Invoice generator

Final Thoughts

Knowing how to file multiple 1099s accurately and efficiently is a standard part of modern business operations. The IRS made the process simple by creating intuitive online portals and facilitating electronic filing. However, it’s still critical to understand the differences between various Forms 1099 and their use cases.

Don’t forget to collect Forms W-9 early, calculate total payments, and verify that you’re using the correct 1099 before filing it. This will help you stay on top of all the paperwork and navigate tax season with ease. If you need assistance, check out our Form 1099 generator and make the creation process even faster and more precise.

How to File Multiple 1099s FAQs

#1. Do I need to file a 1099 for each contractor?

Yes, you need to file a 1099 for each contractor you paid at least $600 to in a year. You can’t use a single form for multiple contractors, as each contractor needs their unique copy to file their tax return.

#2. Can I file multiple 1099s at once?

Yes, you can file multiple 1099s at once if that’s required. Moreover, most electronic filing systems, including the IRS Information Return Intake System (IRIS), allow you to upload these documents in bulk. Batch filing helps you stay efficient and organized with your 1099s.

#3. What if I paid a contractor less than $600?

If you paid a contractor less than $600, you’re generally not required to fill out and file Form 1099-NEC. Keep in mind that the contractor is still required to report that income on their own tax return, and you can optionally create a Form 1099 for personal records.

#4. Can one contractor receive more than one 1099?

Yes, one contractor can receive more than one 1099. This usually happens when a contractor works with two or more clients, or when they receive different types of transactions. A contractor getting paid for web design services and for renting out space will receive both Forms 1099-NEC and 1099-MISC.