For HICs, tax forms aren’t abstract paperwork — they define how you classify workers, how you report payments, and how you stay out of trouble with the IRS, NYS, and DCWP. Here’s the no-nonsense breakdown.

Why These Forms Matter

Every subcontractor you pay is either:

• A W-2 employee, or

• A 1099 independent contractor

If you use subs (plumbers, electricians, tile installers, masons, laborers, etc.), you’ll be issuing one of these 1099 forms. Misclassify someone and you invite audits, penalties, back taxes, NYS worker misclassification fines, and DCWP headaches.

This guide explains the three relevant forms:

• 1099 (the general category)

• 1099-NEC

• 1099-MISC

What Is a “1099”?

“1099” isn’t a single form — it’s a family of tax forms used to report various types of payments.

For contractors, “1099” almost always refers to the form you issue to independent subcontractors you paid $600 or more during the year.

From our core definition:

“A 1099 is a tax form used to report payments made to independent contractors—workers who are not employees. If you pay a subcontractor $600 or more in a year, you must issue them a 1099-NEC.”

Think of “1099” as the umbrella term.

1099-NEC: The One Most HICs Use

Use this form for:

• Payments of $600 or more to independent contractors for labor or services.

• Almost all subcontractor relationships in NYC home improvement work.

Examples:

• Paying a licensed plumber to rough in a bathroom

• Using an independent demolition crew

• Hiring a painter who operates under their own business

• Paying a tile setter who invoices you per job

Why it matters:

• The IRS revived Form 1099-NEC specifically to separate contractor payments from the old 1099-MISC.

• NYS follows the same standard.

• This is the foundational proof that the worker is a contractor, not a W-2 employee.

What it signals legally:

• They control how and when they work.

• They use their own tools.

• They’re responsible for their own taxes.

• They may work for other clients.

• You must only hire properly licensed subcontractors in NYC, especially for plumbing, electrical, and other licensed trades. (DCWP and DOB make this clear.

1099-MISC: When You Use It (Rare for HICs)

You do not use 1099-MISC for subcontractor labor anymore.

Use 1099-MISC for payments like:

• Rent paid to a landlord

• Prizes/awards

• Certain legal settlements

• Royalties

• Some materials… but only in very specific cases

You do NOT use 1099-MISC for:

• Contractors

• Labor

• Subcontracted home improvement work

If you’re paying someone for services, it’s 1099-NEC.

If you’re paying for space, rights, or other non-labor categories, it’s 1099-MISC.

Most HICs issue zero 1099-MISC forms in a typical year.

When You Don’t Issue a 1099 At All

You do not issue a 1099 if you:

• Paid a subcontractor less than $600 total during the year.

• Paid a C-corp or S-corp (unless it’s for legal services).

• Paid a worker who should have been a W-2 employee.

• Paid materials-only vendors (Home Depot, suppliers, lumber yards, etc.).

Keep in mind:

• NYC home improvement subcontractors must be licensed.

• Electricians and plumbers require DOB licensure.

If you pay an unlicensed subcontractor, the legal exposure is on you, not them.

How This Ties to Worker Classification

Issuing a 1099-NEC does not magically make someone a contractor.

The IRS, NYS, and DCWP look at the reality of the relationship, not the form.

Subcontractors must:

• Operate their own business

• Use their own tools

• Control their own schedule

• Carry their own insurance

• Work for multiple clients

• Provide invoices

• Be properly licensed if required by DOB or DCWP

If they’re working only for you, using your tools, taking your direction, and treated like staff — they’re a W-2 employee regardless of what form you file.

If you misclassify:

• IRS penalties

• NYS Labor Department audits

• Workers’ Comp Board audits

• DCWP violations if subs weren’t properly licensed or insured

Summary Table

Compliance Reminder for NYC HICs

DCWP rules make it clear:

• You’re responsible for using licensed subcontractors.

• You must supply Workers' Comp coverage or exemption documentation.

• You must follow all lien-law and escrow requirements for client payments.

Your 1099 practices complement these rules but do not replace them.

Bottom Line

Here’s the quick, real-world truth:

• If you’re hiring a subcontractor: issue a 1099-NEC.

• If you're paying rent or miscellaneous non-labor items: that’s 1099-MISC.

• If the person works like an employee: they’re W-2, whether you like it or not.

Master this early, and you avoid the expensive problems most small contractors eventually face.