Year-End 1099 Vendor Reporting: What the New $2,000 Threshold Means for Your Association

Note before you read further: this is a federal tax law change, not a Florida statute, and it's recent. We've corroborated the figures below across multiple professional tax-reporting sources, but we have not been able to verify them against the IRS's own published instructions while writing this. Confirm the current threshold, forms, and deadlines with your CPA or tax preparer before you rely on them for your association's actual filings.

What changed under the One Big Beautiful Bill Act

Public Law 119-21 — widely referred to as the One Big Beautiful Bill Act, or OBBBA — was signed into law on July 4, 2025. Among many other provisions, it raised the long-standing $600 information-reporting threshold for Form 1099-NEC and Form 1099-MISC to $2,000, effective for payments made after December 31, 2025. In practical terms: payments your association makes in 2026 are the first to fall under the new threshold, reported on forms due in early 2027. The $600 threshold had been in place for decades, so this is a meaningful change in which vendors cross the reporting line.

The $2,000 threshold — what it means for your vendor payments

Under the prior rule, any unincorporated vendor your association paid $600 or more during the year for services generally needed a 1099-NEC. For 2026 payments, that line moves to $2,000. A landscaper paid $1,800 for the year, who would have required a 1099 under the old rule, falls below the new threshold and doesn't. A pressure-washing contractor paid $2,400 still does. The threshold applies per vendor, per calendar year — not per invoice or per job.

This doesn't change what counts as reportable — services performed by a person or unincorporated business, not goods purchased with no service component — only the dollar line at which reporting becomes mandatory.

Form 1099-NEC: who you have to report

Associations typically use Form 1099-NEC ("Nonemployee Compensation") for payments to:

• Landscaping, pool, and pressure-washing contractors paid directly as individuals or unincorporated businesses;
• Handyman, repair, and maintenance contractors;
• A community association manager or bookkeeper paid directly rather than through a management company;
• Any other vendor paid for services, where the vendor is not a corporation.

Form 1099-MISC covers a narrower set of payment types (such as rent paid to an individual landlord), and the same higher threshold applies there as well.

The corporation exception — and why attorneys are different

Payments to a vendor organized as a C-corporation or S-corporation are generally exempt from 1099-NEC reporting, regardless of the amount paid. This exemption did not change with the new threshold.

The one long-standing exception: payments to attorneys and law firms for legal services are reportable even when the firm is incorporated. This rule predates OBBBA and has nothing to do with the recent threshold change — it's a separate, well-established requirement that boards sometimes overlook because it doesn't follow the usual corporation exemption.

Backup withholding: what changed, what didn't

Our research indicates the backup withholding trigger — the point at which an association may be required to withhold tax from a vendor payment because the vendor didn't provide a valid taxpayer ID — was raised to track the new $2,000 reporting threshold. The backup withholding rate itself, 24%, did not change. Backup withholding is the exception rather than the rule: it typically only comes up when a vendor refuses to provide, or provides an invalid, Form W-9.

W-9 collection: still the best practice, even below the threshold

Nothing about W-9 collection changed, and a higher reporting threshold is not a reason to collect fewer of them. Request a completed Form W-9 from every vendor before the first payment — before you know whether they'll cross $2,000 for the year. Reasons this still matters:

• You often can't predict at the first invoice whether a vendor will end up above or below the threshold for the full year;
• The W-9 is what tells you whether the vendor is a corporation (and therefore likely exempt) or an individual/partnership/LLC (and therefore in scope);
• Chasing a W-9 from a vendor in January, after the relationship has ended, is far harder than collecting it with the first check.

A year-end 1099 checklist for board treasurers

1. Pull a vendor payment report for the full 2026 calendar year, sorted by vendor.
2. Flag every unincorporated vendor paid $2,000 or more for services.
3. Confirm you have a current W-9 on file for each flagged vendor — entity type, name, and taxpayer ID.
4. Separate payments for goods only (no 1099) from payments that include a service component (potentially reportable).
5. Double-check any attorney or law firm payments — these are reportable regardless of entity type.
6. Confirm the current threshold, forms, and any inflation adjustments with your CPA or tax preparer before filing, given how recent this change is.
7. File and furnish 1099s by the January 31 deadline for the vendor copy and the IRS copy alike.

This pairs well with your other year-end work — see our 2027 budget requirements guide and our late fees and interest guide for the other items usually on a board's year-end list.

Frequently asked questions

What is the new 1099 reporting threshold for vendor payments?

For payments made in 2026 and reported in early 2027, the threshold for issuing a Form 1099-NEC to an unincorporated vendor or contractor rises from $600 to $2,000 for the calendar year. This change came from the One Big Beautiful Bill Act, signed into law July 4, 2025. Associations should confirm the exact figures with a CPA or tax preparer before relying on them.

Which vendors still need a 1099-NEC from our association?

Any unincorporated vendor or contractor — sole proprietors, partnerships, and most LLCs — that your association paid $2,000 or more during 2026 for services (landscaping, pressure washing, repairs, management fees paid directly to an individual, and similar work). Payments for goods only, with no service component, are generally not reportable.

Do payments to incorporated vendors need a 1099?

Generally no. Payments to a C-corporation or S-corporation are typically exempt from 1099-NEC reporting. The long-standing exception is payments for legal services: payments to attorneys and law firms are reportable even when the firm is incorporated. That attorney rule did not change with the new threshold.

Should we still collect a W-9 from every vendor, even below $2,000?

Yes. Collecting a completed Form W-9 before the first payment, regardless of the expected total, remains the safest practice. It confirms the vendor's entity type and tax ID up front, so the association isn't scrambling in January to track down a vendor who ended up crossing the threshold.

When are 2026 vendor 1099s due?

Form 1099-NEC for 2026 payments is due to both the vendor and the IRS by January 31, 2027. That filing deadline did not change — only the dollar threshold for which payments must be reported changed.

For the IRS's own guidance on information reporting, see the current-year instructions for Form 1099-NEC at IRS.gov, and confirm any dollar thresholds against the version in effect for the 2026 tax year.

This article is for general educational purposes and reflects our understanding of a recent federal tax law change (Public Law 119-21) as of the publish date above. It is not tax or legal advice. Because this change is recent, we have relied on secondary professional sources rather than direct IRS guidance in preparing this article, and have not independently verified every figure against IRS.gov. Reporting thresholds, withholding rules, and deadlines can be adjusted or clarified by the IRS. Confirm current requirements with your CPA or tax preparer before relying on this article for your association's actual 1099 filings.