A 1099-NEC in your mailbox in late January or early February means someone paid you $600+ for services last year and reported it to the IRS. Three scenarios cover almost every case.
Scenario A: You remember the work, the amount looks right
Most common case. You worked a private bartending gig last March, did some catering in October, or had a freelance project. The 1099 amount matches roughly what you remember earning. Action: include it on your tax return.
The income goes on Schedule C, line 1 (gross receipts). Subtract business expenses (supplies, mileage, fees) to get net profit. Net profit flows two places:
- Schedule SE for self-employment tax (15.3% on the adjusted amount)
- Form 1040, Schedule 1 as additional income subject to federal income tax
If this is your only 1099 income and you also have W-2 wages, this is easy — every tax software handles it. If 1099 income is large (over ~$10,000), you should have been making quarterly estimated payments during the year. If you didn't, expect to owe an underpayment penalty along with the tax.
Scenario B: The amount is wrong
You worked the gig, but the 1099 says you earned more than you actually did. Maybe it includes a refund you returned. Maybe it lists payments that never cleared. Maybe it includes gross plus expenses they're supposed to deduct.
Steps to take, in order:
- Cross-check with your own records. Bank deposits, invoices, contracts. Be sure the 1099 is actually wrong before you escalate.
- Contact the issuer in writing. Email is best for documentation. Ask them to send a corrected 1099 (marked "CORRECTED" in the top box) and to file the correction with the IRS. They have until February 28 to file corrections electronically.
- Keep all correspondence. If you have to file with the wrong amount, you'll need documentation.
- If they refuse to correct: file your return with your accurate amount AND attach Form 8275 (Disclosure Statement) explaining the discrepancy. This doesn't prevent an IRS inquiry, but it documents your good-faith position.
Pro tip: the IRS's matching system flags returns where the reported income is less than the sum of 1099s on file. A return that matches the 1099 (even if the 1099 is wrong) won't trigger a notice. A return that doesn't match will. The Form 8275 disclosure protects you in the second case.
Scenario C: You never worked for this company
You opened the envelope. The payer name is unfamiliar. The amount is shocking. This is either identity theft or a paperwork error — either way you need to act fast.
Steps:
- Confirm it's actually addressed to you. Look at the SSN and name. If either is wrong, it was misdelivered — return to sender.
- Contact the payer. Sometimes it's a clerical mix-up — they meant to send it to someone with a similar name. Sometimes it's a former contractor account that was reactivated by mistake.
- If the payer confirms they intended to pay you and you didn't receive money: this is likely identity theft. Someone used your SSN to receive payments. File:
- Form 14039 (Identity Theft Affidavit) with the IRS
- A report at IdentityTheft.gov (FTC)
- A police report (some banks require this for fraud investigations)
- Do NOT include the income on your return. Attach a statement explaining the disputed 1099 along with copies of your reports.
The under-$600 trap
The $600 threshold is when the payer must issue a 1099. It is NOT when you owe tax. If you earned $450 from a side gig, you still owe income tax on it. The IRS expects 100% of your earnings to appear on your return, with or without a 1099.
The $400 SE tax threshold works similarly: under $400 net profit, you skip Schedule SE — but the income still goes on Schedule C and Form 1040 for income tax purposes.
Late 1099s and amended returns
If a 1099 arrives in May (after you've already filed in April), you need to file an amended return (Form 1040-X) within three years to include the income. The amendment carries the additional tax, possible interest, and sometimes a penalty.
Don't wait for the IRS to catch it. Voluntary amended returns avoid the accuracy-related penalty; involuntary IRS corrections (a CP-2000 notice) come with it.
What about Form 1099-K?
If you received payments through Venmo for Business, PayPal, Stripe, or other processors, you may also get a 1099-K. For 2026, the threshold is $2,500 in gross payments. The same rules apply: include the income, deduct any business expenses (including processor fees), and don't double-count if you've already included the same income on a 1099-NEC.