1099-NEC

A 1099-NEC is the IRS tax form used to report Nonemployee Compensation—payments made to independent contractors, including subcontractors. If you pay any subcontractor $600 or more in a calendar year, you are legally required to issue them a 1099-NEC.

This form specifically reports payments made to workers who:

• Are not employees

• Control their own schedule and methods

• Use their own tools

• Carry their own insurance

• Operate as separate businesses

For NYC home improvement contractors, nearly all paid subcontractors—plumbers, electricians, HVAC techs, masons, tile installers, and other specialists—fall under this rule.

The 1099-NEC replaced the old “Box 7” on Form 1099-MISC. The IRS now uses the NEC form exclusively to track contractor payments, and failing to file it can trigger penalties, audits, and worker-classification scrutiny from the IRS, New York State, and DCWP.