1099-NEC: Nonemployee Compensation (2026)
You got paid as a contractor — here's what a 1099-NEC means for your taxes.
Form 1099-NEC reports nonemployee compensation — money you earned as an independent contractor, with no tax withheld. If you received one, you're self-employed for that income: you report it on Schedule C, owe 15.3% self-employment tax on the profit (Schedule SE), and usually should make quarterly estimated payments. The upside is business deductions. It replaced the old 1099-MISC box for contractor pay.
Who files 1099-NEC
- Independent contractors, freelancers, and gig workers who earned $600+ from a payer.
- Anyone who received a 1099-NEC and must report the income on Schedule C.
- Side-hustlers whose client or platform issued a 1099-NEC.
What to do when you get a 1099-NEC
A 1099-NEC means the payer treated you as a contractor and withheld nothing — so the tax is on you. Report the income (and your related expenses) on Schedule C, then Schedule SE calculates the 15.3% self-employment tax on your profit. Because nothing was withheld, you generally owe quarterly estimated payments to avoid a penalty.
The trade-off for the extra tax is deductions: mileage, home office, supplies, software, and more reduce your profit — and therefore both income tax and SE tax. Many contractors also qualify for the 20% QBI deduction.
Frequently asked questions
What's the difference between 1099-NEC and 1099-MISC?
1099-NEC reports nonemployee (contractor) compensation; 1099-MISC now covers other payments like rent, prizes, and royalties. Contractor pay moved to the NEC form in 2020.
Do I owe taxes on a 1099-NEC?
Yes. It's self-employment income with no withholding — you owe income tax plus 15.3% self-employment tax on the net profit. Set aside 25–30% and pay quarterly.
What can I deduct against 1099-NEC income?
Ordinary business expenses — mileage, home office, supplies, software, a share of phone/internet — plus half of your SE tax and possibly the 20% QBI deduction. They lower both income and SE tax.
Sources & verification
Last reviewed July 12, 2026.