What You Need to Know About Reporting Nonemployee Compensation

ARTICLE | March 11, 2026

Independent contractors give businesses the flexibility to stay competitive and cost-effective, but working with them comes with reporting and withholding responsibilities that are easy to overlook. Missing a deadline or mishandling a requirement can quickly lead to IRS notices, penalties, and unnecessary headaches. Key obligations include filing Form 1099-NEC for payments of $600 or more in 2025, understanding when backup withholding applies, and knowing the rules recently updated under the One Big Beautiful Bill Act. Staying on top of these requirements takes preparation and accurate recordkeeping.

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