I Hired My First Contractor. Here’s What I Needed to File

Key takeaways

• If you pay a contractor $600 or more in a year, you may need to file Form 1099-NEC.
• Filing a 1099 doesn’t make you responsible for someone else’s taxes — it simply documents what you paid for business services.
• Most 1099-NECs are due January 31, and filing on time helps you avoid penalties and keep your deductions clean.

When I hired my first contractor, I wasn’t thinking about tax forms — I was thinking about getting some help. Then it hit me: Do I need to file a 1099 for this?

If you’ve had the same question, you’re not alone.

When you need to file a 1099 for contractor payments

If you paid a contractor (someone self-employed rather than your employee) $600 or more during the year, you may need to file a 1099-NEC.

You usually don’t need one if the contractor is a corporation or if you paid through a platform that handles tax forms for you. If you’re not sure if that applies in your situation, it’s worth confirming. A few minutes now can save headaches later.

It might be a regular monthly gig, or small, ad-hoc payments that add up. Either way, it counts. The main thing is that you have the documentation for what you paid and why. That way you can claim legitimate deductions and stay organized. 

What a 1099-NEC means for you

It doesn’t mean you’re responsible for your contractor’s taxes, or that you’ll be hit with extra on your bill.

A 1099-NEC is simply a way to tell the IRS: “I paid this person for services.”

They’re then responsible for reporting their self-employed income to the IRS.

Filing the form helps you:

• Keep your expense deductions backed up
• Stay organized with your records
• Make tax time less stressful

What happens if you forget to file a 1099

If you miss the deadline for filing a 1099 — January 31 for Form 1099-NEC — you may have to pay a penalty.

Even aside from that, forgetting to file can cause headaches: lost deductions if the expense isn’t documented, IRS notices asking for clarification, and extra paperwork to get everything straightened out.

How paying a contractor can affect your taxes

When you pay someone for work related to your business or side hustle, that cost is often deductible. That means it can reduce the income you report to the IRS, potentially lowering your overall bill.

Hiring your first contractor is a sign that your projects or business are growing. Yes, it may mean your taxes are a bit more complex, but it doesn’t have to be a hassle. A little organization now can save you stress and money later.

Ready to bring in help? Here’s what to do when you need to send a 1099. And for extra guidance on all things small business, TurboTax experts are here for you every step of the way.