W-9 and 1099 Basics for Contractors Who Hire Subs

By Jeff, Jobsite Forms Company · Updated 2026-10-21 · 5 min read

If you pay subcontractors, January can sneak up on you. Suddenly you need addresses and tax ID numbers for a drywall guy you used twice in April and a painter whose phone number changed. The fix is simple: collect the paperwork up front and keep a running list all year.

This guide covers the basics in plain English. It's general information, not tax advice. Tax rules change, and your situation may have details that matter, so confirm with your tax preparer or the IRS instructions for the current year.

The two forms in one sentence each

• Form W-9 is what your sub fills out and gives you. It has their legal name, business name, tax classification, address, and taxpayer ID number (an SSN or EIN). You keep it. You don't send it to the IRS.
• Form 1099-NEC is what you file after the year ends to report what you paid a non-employee for services. One copy goes to the IRS and one goes to the sub.

The W-9 gives you the information you need to fill out the 1099. That's the whole relationship.

When to get a W-9: before the first payment

Get the W-9 before you pay a sub anything. Make it part of your onboarding, right next to their certificate of insurance. People are much more willing to fill out paperwork when they're waiting on their first check than they are in January, when the job is long over.

A simple rule: no W-9, no first payment. Tell subs this up front so nobody's surprised.

When you get the form back, look it over:

• Is the name filled in the way it appears on their tax return?
• Is the tax classification checked (individual/sole proprietor, LLC, corporation and so on)?
• Is there a taxpayer ID number?
• Is it signed and dated?

Store W-9s securely. They contain Social Security numbers. A locked file or an encrypted folder is a good idea, and only the people who need them should be able to see them.

Who gets a 1099-NEC

Generally, you file a 1099-NEC when all of these are true:

• You paid someone who isn't your employee.
• The payment was for services in the course of your business (not a personal payment).
• The person is an individual, partnership, or an LLC taxed as one. Payments to corporations are usually exempt, with some exceptions, such as payments to attorneys.
• You paid them at least the reporting threshold during the year.

The threshold changed for 2026

For years the threshold was $600. For payments made in 2026, it's $2,000, and it's scheduled to be adjusted for inflation in later years. Payments made in 2025 still used the $600 threshold. Check the current instructions each year so you're using the right number.

Collect a W-9 from every sub anyway, even if you think you'll stay under the threshold. Plenty of "one small job" subs turn into regulars.

Card and app payments are different

If you paid a sub with a credit card or through a payment processor, the processor generally handles the reporting on its own form, and you usually don't include those payments on your 1099-NEC. Payments by check, cash, bank transfer or ACH generally do go on it. This is a common point of confusion, so ask your tax preparer how to handle mixed payments.

The deadline

The 1099-NEC is due to both the IRS and the recipient by January 31. When that date falls on a weekend, it moves to the next business day. For 2026 payments, January 31, 2027 is a Sunday, so the deadline is Monday, February 1, 2027.

There is no automatic extension like there is for many other forms, and late or incorrect filing can bring penalties. This is why the year-round routine below matters.

Paper or electronic?

If you file 10 or more information returns in total for the year (counting all types together), you're required to file electronically. Below that, you can still choose paper. The IRS has a free online system called IRIS that lets small businesses file 1099s electronically without buying software. If you file on paper, you'll need the official red-ink IRS copies (not a printout from a website) and Form 1096 as a cover sheet.

When a sub won't give you a W-9

First, explain that it's required for you to pay them and that you file the same paperwork for every sub. Most people just needed a nudge.

If a sub refuses to provide a taxpayer ID number, the rules may require you to start backup withholding: holding back 24 percent of their payments and sending it to the IRS. That's a hassle for everyone, which is usually enough to get the form back. Ask your tax preparer before you start withholding so you do it correctly.

Sub or employee? Get this one right

The 1099 only applies to people who are truly independent contractors. If you control how, when and where someone works, supply their tools, and they work only for you, they may legally be an employee, whatever you call them. Misclassifying workers can lead to back taxes and penalties. The IRS and the Department of Labor both publish guidance on this, and many states have their own, often stricter, tests. If you're not sure, ask a professional.

A simple year-round routine

When you hire a sub

• Collect the W-9 and certificate of insurance before the first payment.
• Add the sub to a tracking sheet: name, business name, classification, TIN on file (yes or no), address, and COI expiration date.

Every time you pay

• Log the date, amount, job, and how you paid (check, ACH, card, app).
• Get a lien waiver with progress and final payments where that applies.

Every quarter

• Total each sub's payments so far. Flag anyone at or near the threshold.
• Chase any missing W-9s now, not in January.

Early January

• Total the year for each sub, excluding card and app payments.
• Confirm names and TINs match the W-9s exactly.
• File and send the 1099-NECs well before the deadline.
• Hand everything to your tax preparer.

Common mistakes

• Waiting until January to ask for W-9s.
• Using the old $600 threshold for 2026 payments, or forgetting that it changes again with inflation.
• Including card and app payments on the 1099-NEC.
• Typing the name or TIN differently from the W-9.
• Printing paper copies from a website instead of using official forms.
• Calling someone a sub when they're really an employee.

Frequently asked questions

Do I send the W-9 to the IRS?

No. Keep it in your records. You use it to fill out the 1099.

Do homeowners have to send me a 1099?

Generally no. The 1099-NEC requirement applies to payments made in the course of a trade or business, not personal payments by homeowners.

General information only, not tax or legal advice. Thresholds, deadlines and rules change. Always check the current IRS instructions for Forms W-9 and 1099-NEC, and talk to a tax professional about your situation.