Do you need a 1099-NEC for someone who helps with your reselling?

What the IRS says

The four conditions

The 12/2026 instructions for Forms 1099-MISC and 1099-NEC say a payment is generally reported as nonemployee compensation when all four are true:

1. You made the payment to someone who is not your employee.
2. You made it for services in the course of your trade or business.
3. You made it to an individual, partnership, estate or, in some cases, a corporation.
4. Your payments to that payee were at least $2,000 during the year.

Exceptions resellers run into

• Card and payment app payments: payments made with a credit or payment card and third-party network transactions are reported on Form 1099-K by the payment settlement entity, and aren't subject to reporting on Form 1099-NEC.
• Merchandise: payments for merchandise, freight, storage and similar items are listed exceptions for both Form 1099-NEC and Form 1099-MISC, so buying inventory from an individual, such as a yard-sale seller or another reseller, doesn't call for either form, whatever the amount.
• Services that come with parts: the instructions count payments for parts or materials used to perform a service as part of the payment for services when supplying them was incidental to the service, so a repair bill for labor and parts counts in full.
• Corporations: generally no 1099-NEC, including an LLC treated as a C or S corporation, with exceptions the instructions list.
• Employees: wages go on Form W-2, not Form 1099-NEC.

Deadline, taxpayer number and e-filing

Form 1099-NEC is filed with the IRS and furnished to the recipient by January 31. If a date falls on a Saturday, Sunday or legal holiday, it moves to the next business day.

Publication 1099 suggests asking a U.S. payee to complete Form W-9 for their taxpayer identification number. Payments can be subject to backup withholding at 24%, and the $2,000 threshold applies to backup withholding too.

The IRS's information return page adds that you must also file Form 1099-NEC for each person you withheld federal income tax from under the backup withholding rules, regardless of the amount of the payment. It gives the thresholds by payment date: $600 for payments made before 2026, $2,000 for payments made in 2026, and the inflation-adjusted figure in Publication 1099 for payments made after 2026.

If you have to file 10 or more information returns in a year, counting all types together, Publication 1099 says you must e-file.

On your own Schedule C, the instructions describe line 11 as contract labor, payments to people you don't treat as employees, and line I asks whether you made payments that would require Forms 1099.

Worked examples

Edge cases

• Buying inventory from a picker or another seller is a payment for merchandise, one of the listed exceptions.
• Below the threshold isn't the same as untaxed: the instructions note some payments don't have to be reported on Form 1099-NEC although they may be taxable to the recipient.
• Whether a helper is an employee or an independent contractor is a separate question with its own rules; employees get Form W-2.
• The 1099-K threshold for payment apps and marketplaces is a different rule: over $20,000 in more than 200 transactions. See 1099-K for resellers.

What to do

1. Get the helper's name, address and taxpayer identification number on Form W-9 before the first payment.
2. Track payments per person per calendar year, and note how each was paid.
3. Put January 31 on your calendar if anyone is over $2,000.
4. Check with a tax professional about whether a helper is an employee or a contractor.

Questions