Do I Have to Send 1099s to My Subs, and How Do I Collect W-9s?

Do I have to send a 1099 to my subcontractors?

Usually yes, if you paid a sub for work in your business and the total for the year passed the IRS reporting threshold. The form is the 1099-NEC, and the sub gets one copy while another goes to the IRS.

The rules turn on how much you paid, who you paid and what for, so run your year-end list past your accountant or your state's revenue department. Here is the basic way to sort it out:

• List everyone you paid for labor or services who is not on your payroll.
• Add up what each one was paid for the year, across all jobs.
• Check that you have a signed W-9 for each one.

If you are worried a sub is really an employee, look at how the work actually goes. A guy who sets his own hours, brings his own tools and works for other contractors looks very different from a guy who works only for you, on your schedule, out of your truck. Where that line falls varies, so ask your accountant before you assume, and ask your insurance agent how your workers' comp treats subs.

How much do I have to pay a sub before I need to send a 1099-NEC?

For payments made in 2025 the threshold is $600 per contractor per year, and for payments made in 2026 it rises to $2,000 (Miter). The 2025 payments are reported by January 31, 2026, and the 2026 payments are reported in early 2027.

The threshold is per sub, not per job, so you add up every job he did for you. Say you paid a framer $4,500 in March and $3,000 in September for 2025 work. His total is $7,500, which is well over the $600 line if those payments fall in 2025, so he gets a 1099-NEC.

Get a W-9 from every sub anyway, no matter how small the first job looks. Say a sub does a $400 repair in spring and a $1,800 job in the fall, then if you add them up he is at $2,200. Nobody plans to cross the line, and the W-9 is much easier to get in April than the following January.

When should I get a W-9 from a subcontractor, and do I send it to the IRS?

Get the W-9 before you make the first payment, ideally when you agree on the price. You keep it in your own records and never send it to the IRS (Dots).

The W-9 collects the sub's legal name, address, taxpayer identification number (TIN) and tax classification, which is the information you need to report him correctly (Tax1099). Here is a simple routine:

• Send a blank W-9 with your quote or work agreement, before any work starts.
• Put one line in your agreement: no signed W-9, no payment.
• When it comes back, check that the name, address, TIN and classification are filled in and that it is signed.
• File it with that sub's paperwork and write the date you got it.

You can say it plainly: "Before I can cut your first check, I need a signed W-9. It's one page, and it's only so I can report what I pay you at year-end." Most subs sign without a fuss when it is asked for up front, because it is just part of getting paid.

What if my sub refuses to fill out a W-9?

Don't pay him until he signs, because without a W-9 you may have to withhold 24% of what you pay him and send it to the IRS (Claimyr). A missing or mismatched TIN triggers that same backup withholding.

Say you owe a sub $5,000 and he has no W-9 on file. If 24% is withheld, you would hold back $1,200 and send it in, which is not a conversation anyone wants to have on the last day of a job.

When a sub dodges the form, these steps protect you:

• Ask again in writing (text or email) and keep the message.
• Write down each date you asked, because you should document your good-faith efforts to get the form.
• Explain that the W-9 does not create his tax bill. He owes tax on that money either way, and independent contractors pay self-employment tax, currently 15.3% of net earnings, and generally make estimated payments four times a year (LumberFi).
• If he still won't sign, decide whether he is worth the risk, and ask your accountant how to handle any payment you have already made.

Do I need a 1099 for a sub who is an LLC or a corporation?

Get a W-9 from every sub regardless of how he is set up, because the W-9 is where he tells you his tax classification. Whether a 1099-NEC is needed then depends on that classification, so ask your accountant about any sub who is not a plain sole proprietor.

Here is a rough way to think about it:

Don't guess from the name on the truck door. A sub with "LLC" in his name may be taxed as a sole proprietor, and the form tells you which. Collecting the W-9 from everybody costs you nothing and lets your accountant make the call in January.

When is the 1099-NEC due, and what happens if I'm late?

The 1099-NEC must be given to the sub and filed with the IRS by January 31 of the year after you made the payments (1099Online). Penalties for missing the deadline start at $60 per form and can escalate (WageFiling).

Failure to file can cost up to $340 per missing form, charged once for not filing with the IRS and again for not giving the sub a copy (Blue Cloud CPA). Say six forms are missing and each one hits that top penalty, then if you multiply it out you are looking at $2,040.

Don't wait until the last week of January. A workable schedule looks like this:

• First week of January: total what you paid each sub for the prior year.
• Second week: match each total to a W-9 and fix any missing or unclear names, addresses or TINs.
• Third week: hand everything to your accountant or whoever files for you.
• Before January 31: confirm the forms went to the subs and to the IRS.

How do I keep this from turning into a January scramble, and how long do I keep the records?

Make the W-9 part of onboarding every sub, and keep W-9s, invoices and payment records for at least four years (EdgeStrat Finance). If a sub's paperwork lives in your truck, your texts and a shoebox, January will always hurt.

Keep one folder per sub with the signed W-9, his invoices and a record of every payment. If you ask subs to invoice you, our free invoice template gives them a clean layout to copy, which makes your year-end totals easier to check.

The same habit helps with job costing. In MagicBuild, receipts are filed to the job, you can see job profit as you go, and it syncs with QuickBooks, so what you paid people is not scattered across three places when your accountant asks.

If you want one place to run estimates, crew and payments, see what MagicBuild does. It costs $69 a month with 14 days free, and crew and clients don't cost a seat, so you can start a free trial and see if it fits how you work.