You got a 1099-NEC. Now what?

A 1099-NEC says a business paid you for work and treated you as a contractor rather than an employee. Nothing was withheld from those payments, so the tax on them is still yours to pay, and the return handles them on Schedule C instead of as wages.

It means you were a contractor, not an employee

NEC stands for nonemployee compensation. The payer decided you were in business for yourself: no withholding, no employer share of Social Security and Medicare, no W-2 at the end of the year. The IRS receives a copy of the form with your name and taxpayer identification number on it, so the amount is already on the record before you file.

That classification is not always correct. If the facts look more like employment — set hours, equipment supplied to you, close supervision of how the work is done — there is a process for raising it, and Form SS-8 and Form 8919 are part of it. Bring it to your preparer before the return goes out rather than leaving the income off.

The threshold, and why it matters less than you think

A payer generally has to issue a 1099-NEC once it pays you $600 or more during the year for services. Under that amount, no form is required. For payments made in 2026 the threshold rises to $2,000.

The income is taxable either way. The threshold is a reporting rule for the payer, not an exemption for you. Cash jobs, small app payouts and the client who never sent anything belong on the return the same as the amounts that arrived with paper. Your own records are the real source; the forms only cross-check them.

The income goes on Schedule C, and expenses come off

Contractor income is business income, so it goes on Schedule C along with the rest of the receipts from that work. Schedule C is also where the ordinary and necessary costs of doing the work come off: supplies, software, business mileage, professional fees, advertising, the business share of a phone line.

That subtraction is the reason the form is less alarming than it looks. Tax is figured on net profit, not on the gross amount in box 1. A contractor who never tracks costs pays tax on money that was never really income.

Self-employment tax on top of income tax

Wages carry Social Security and Medicare tax split between you and an employer. On self-employment income you carry both halves, and Schedule SE is where that happens.

The tax runs at 15.3% applied to 92.35% of your net profit. That multiplier stands in for the employer share an employee would never have been taxed on. Then 50% of the resulting tax comes off your income as a deduction, which softens the income-tax side of the bill. The Social Security part stops once your wages and self-employment earnings together reach the year's wage base; the Medicare part keeps going.

If your net earnings from self-employment come to less than $400, no self-employment tax is due. You may still owe income tax on the profit, and you may still have to file.

Paying as you go

The federal system expects tax during the year, not only at the end of it. Contractors usually handle that with quarterly estimated payments on Form 1040-ES, figured from expected profit. Skipping them can bring an underpayment penalty even if you pay the whole balance on time in April.

There is a second route if you or your spouse also holds a W-2 job: raise the withholding there with a new W-4. Withholding is treated as paid evenly across the year, so it can cover a shortfall that estimated payments alone would leave exposed.

What to keep, and what to do with a wrong form

If a form never arrives, report the income anyway from your own records. The IRS matches what payers file against what you report, and a gap in either direction is what produces a notice months later.