Who actually needs to get a 1099-NEC? Super confused about LLCs and corporations

Wait, I'm confused about the LLC part. If I have an LLC but I'm the only owner (single-member), do clients still need to send me a 1099? And what's this about "electing to be taxed as a corporation"? How would I know if I did that?

By default, a single-member LLC is treated as a "disregarded entity" for tax purposes, which means the IRS treats you as a sole proprietor. In this case, yes, clients should still send you a 1099-NEC if they pay you $600 or more. Electing to be taxed as a corporation requires filing Form 8832 or Form 2553 with the IRS. If you don't remember filing these forms, you're almost certainly still being taxed as a sole proprietor, meaning you should receive 1099-NECs from your clients.

Hmm, sounds interesting. Does it work if you have a mix of different income types? Like I have some W-2 employment, some freelance work, and a small online store. Would it handle all that?

I'm always skeptical of tax tools. How accurate is it really? Has anyone verified the advice against what a CPA would tell you? I've been burned before with software giving me wrong information.

It absolutely handles mixed income types. I was in a similar situation with W-2 income plus freelance work, and it helped me understand how to report everything correctly. The system automatically identifies the different income streams and explains the tax implications for each. Regarding accuracy, I actually had my accountant review the guidance it gave me, and she was impressed. The tool cites IRS publications and regulations for its advice, so you can verify everything. The biggest difference from other tools I've used is that it's conversational and explains WHY certain rules apply to your situation rather than just giving generic advice.

How does this actually work? Does it just hold your place in line somehow? I'm confused because I thought the IRS phone system was just completely overloaded.

Yeah right. There's NO WAY this actually works. The IRS phone system is completely broken - I've literally tried calling 50+ times this year without getting through. If this was real, everyone would be using it.

It works by using specialized technology that navigates the IRS phone tree and waits on hold for you. When an agent finally answers, the system calls you and connects you directly to that agent. It's basically like having someone else wait on hold in your place. The IRS phone system is definitely overloaded, but it's not that calls never get answered - it's that the wait times are ridiculous (often 2+ hours). This service just handles that wait time for you so you don't have to sit there listening to the hold music all day.

But didn't the rules change recently about payment apps? I thought there was some new threshold for Venmo and PayPal reporting that was supposed to start but then got delayed?

You're right about the payment app changes. The threshold for payment apps to issue a 1099-K was supposed to drop to $600 (from $20,000), but that implementation has been delayed. For 2024 taxes (filed in 2025), the threshold will be $5,000. However, this is separate from the client's responsibility to issue a 1099-NEC. Even if you don't receive a 1099-K from the payment processor, your clients should still issue a 1099-NEC if they paid you $600+ for services as a non-corporate entity. The two forms serve different purposes, and one doesn't replace the other.

Yes, you need to issue 1099-NECs to both contractors since you paid them each over $600 for services. Here's what you need to do: 1. The deadline for providing 1099-NECs to contractors was January 31, 2025, so you're late on that. You should still issue them ASAP. 2. You must also file these forms with the IRS by February 28, 2025 (if filing on paper) or March 31, 2025 (if filing electronically). 3. You may face penalties for late filing, but they're relatively small if you file soon.

Thanks for letting me know! I had no idea I was already late. I'll get these done this week. Do I need any special software to create the 1099-NECs or can I just buy the forms somewhere?

You have several options for creating 1099-NECs. You can buy the forms from office supply stores like Staples or online and fill them out manually, but I'd recommend using tax software or online services like TaxAct, FreeTaxUSA, or even the IRS's own FIRE system for electronic filing. Electronic filing is usually easier and has a later deadline (March 31st vs February 28th for paper). Many of these services will handle both sending copies to your contractors and filing with the IRS. Since you're already past the January 31st deadline for getting copies to contractors, electronic services can often email or mail the forms quickly to help minimize any penalty exposure.

This is such an important point that I wish more freelancers understood! I made a similar mistake in my first year of freelancing - I was only tracking the 1099s I received and nearly missed reporting about $1,500 in income from a client who never sent the form. What really helped me was setting up a simple spreadsheet at the beginning of each tax year with columns for client name, total payments received, and whether I got a 1099-NEC. That way I could cross-reference everything when filing my taxes. It's also useful for following up with clients who should have sent forms but didn't - sometimes they just forgot or made an administrative error. @Dmitry Ivanov - since you mentioned making $8,400 from different clients, I d'definitely recommend creating this kind of tracking system going forward. It ll'save you a lot of stress during tax season!

You just report the income normally on your tax return - there's no special procedure needed when a client fails to send a 1099-NEC. The IRS expects you to report all income regardless of whether you received the proper forms. If there's a discrepancy later (like the IRS has a record of a 1099-NEC that you didn't receive), they'll typically send you a notice asking about it. At that point, you can explain that you did report the income even though you never got the form from the client. It's actually much better to report the income without the 1099 than to not report it at all. The IRS is more understanding about missing paperwork than unreported income. Keep good records of your invoices and payments as backup documentation - that's really all you need to protect yourself. @Tony Brooks - since you mentioned you re'still missing two 1099-NECs, you might want to reach out to those clients soon. Sometimes they just need a gentle reminder, and it s'easier to get the forms now than deal with potential questions later.

@Maya Patel that s'brilliant advice about discussing tax forms upfront! I wish I had known to do this when I started freelancing. I ve'had so many awkward conversations at year-end with clients who had no idea they needed to send me anything. One thing I d'add is that it s'also helpful to send a gentle reminder email in December to all your clients who hit the $600 threshold, just as a friendly heads up that they ll'need to send a 1099-NEC by January 31st. I include my business name exactly as it should appear on the form and remind them of my EIN or SSN whichever (they have on file .)This has really reduced the number of missing or incorrectly filled out forms I receive. Some clients genuinely forget, and others appreciate having the exact information they need to complete the forms properly.