Do I Have to Send My Handyman a 1099?
If your rental activity is a trade or business, you generally must issue Form 1099-NEC to unincorporated contractors you paid for services during the year, once the payments reach the reporting threshold — which the IRS states is $2,000 for payments made in 2026, up from $600 for earlier years.
Three things narrow it fast: payments to corporations are generally exempt, payments made by credit card or a third-party payment network are excluded entirely (the processor reports them on Form 1099-K instead), and a landlord whose activity is not a trade or business is not required to file at all. The 1099-NEC deadline is January 31 to both the recipient and the IRS, with no automatic extension; the 1099-MISC copy to the IRS is later.
The short version
- Threshold for 2026 payments: $2,000 (it was $600 through 2025, and is to be inflation-adjusted from 2027).
- Cash, check and bank transfer are reportable; card and payment-app payments are not — the processor handles those.
- Corporations are generally exempt, but a single-member LLC usually is not. The W-9 tells you which.
- Get the W-9 before the first payment, not in January.
- Schedule E asks you directly whether you made payments requiring a 1099 — the IRS puts the question to you.
Every January this question resurfaces, and the answers online contradict each other because they're answering slightly different questions. Here is the version with the joints showing.
Step 1 — Is your rental a trade or business?
The obligation to file information returns applies to payments made in the course of a trade or business. The IRS is explicit that you are not required to file if you are not engaged in one. (IRS: Am I required to file a Form 1099?)
The awkward part: for a small landlord there is no bright-line IRS test for when renting property becomes a trade or business rather than an investment. Regular, continuous, profit-motivated activity points one way; a single passively-held property managed by someone else points the other. Most preparers will tell you that a self-managing landlord doing their own screening, maintenance and bookkeeping looks a lot like a trade or business.
There's also a nudge built into the form itself: Schedule E asks whether you made payments that would require you to file Forms 1099, and whether you will file them. That is the IRS putting the question to you directly, in writing, under signature.
Step 2 — Does the payment cross the threshold?
The IRS states plainly: "For payments made before 2026, the reporting threshold is $600. For payments made in 2026, the reporting threshold is $2,000." The change came from 2025 legislation, and the $2,000 figure is to be adjusted for inflation beginning in calendar year 2027 — so check the current number each year rather than memorizing it.
The test is the total paid to that person over the year, not per job. Four $600 visits from the same plumber is $2,400, not four amounts under the threshold.
Step 3 — Who is exempt?
- Corporations are generally exempt, including an LLC that has elected to be taxed as a C or S corporation. The main exceptions are payments to attorneys, and medical and health care payments — those get reported even to a corporation.
- Single-member LLCs and partnerships are not exempt. "LLC" on the invoice tells you nothing by itself; the W-9 tells you the federal tax classification.
- Employees aren't 1099 recipients at all — they get a W-2, and a resident manager may well be one.
- Materials-only purchases — the hardware store, the appliance retailer — aren't payments for services.
Step 4 — How did you pay? (The exception that removes most of the work)
This is the most under-used rule in the whole area. Payments made by credit card, debit card, or through a third-party settlement organization are excluded from 1099-NEC and 1099-MISC reporting, because the card processor or network reports them on Form 1099-K instead. (Instructions for Forms 1099-MISC and 1099-NEC.)
Cash, check and ordinary bank transfers are not covered by that exception and remain your responsibility. For a landlord with a handful of vendors, choosing to pay contractors by card can legitimately remove the filing obligation for those payments — worth knowing before January, not after.
The files that do this for you
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Step 5 — NEC or MISC?
| What you paid for | Form |
|---|---|
| Services from a non-employee — plumber, handyman, cleaner, bookkeeper, landscaper | 1099-NEC, box 1 |
| Rents you paid (e.g. equipment or office rent), or a manager reporting rent paid to an owner | 1099-MISC, box 1 |
| Attorney fees for legal services | 1099-NEC (gross proceeds paid to an attorney go on 1099-MISC box 10) |
Note the direction of travel on rents: if a property manager collects rent for you, they report it to you on a 1099-MISC. Your tenant does not issue you anything.
Step 6 — The W-9, and why January is too late
Form W-9 is how you collect a payee's legal name, taxpayer identification number and federal tax classification, certified by them. (About Form W-9.) Collect it before the first payment. A contractor who wants to be paid answers promptly; a contractor who finished the job in June and was paid in July has considerably less motivation to answer in January.
If a payee won't provide a correct TIN, backup withholding at 24% is the mechanism the rules provide — which is exactly the conversation you'd rather have in advance.
Step 7 — Deadlines and filing
- 1099-NEC: to the recipient and to the IRS by January 31. There is no automatic extension for this form.
- 1099-MISC: to the recipient by January 31 (February 15 where boxes 8 or 10 apply); to the IRS by February 28 on paper or March 31 if filing electronically.
- E-filing: required if you file 10 or more information returns in aggregate — the count combines W-2s and all 1099 types, it is not per form. Most small landlords are well under, but a landlord with employees can cross it faster than expected. The IRS's IRIS portal handles free e-filing.
- Where a deadline falls on a weekend or legal holiday it moves to the next business day — check the exact date each year.
The practical routine
Collect a W-9 before paying any new vendor. Record vendor payments in your expense log with the payment method noted, so the card-paid ones can be excluded at year end. In the first week of January, filter for unincorporated vendors paid by cash, check or transfer above the threshold — that list is your filing list. Then get it out before the 31st.
Start with the free one-pager
The Landlord Tax Deductions Cheat Sheet puts every Schedule E line, the repairs-vs-improvements trap and the most-missed write-offs on a single printable page. Free — no card, no payment details.
Questions landlords ask about this
Is a small landlord a trade or business for 1099 purposes?
There is no bright-line IRS test. The filing obligation applies to payments made in the course of a trade or business, and the IRS states you need not file if you are not engaged in one. Regular, continuous, profit-motivated self-management points toward trade or business; a single passively held property points away. Schedule E asks the question directly, so it is worth settling with your tax professional rather than guessing.
What is the 1099 threshold for 2026, and is it per contractor or per job?
The IRS states the reporting threshold is $2,000 for payments made in 2026, up from $600 for payments made before 2026, with inflation adjustment beginning in 2027. It applies to the total paid to that payee across the year, not to each individual job.
Do I send a 1099 to an incorporated plumbing company?
Generally no. Payments to corporations, including LLCs taxed as C or S corporations, are generally exempt, with exceptions for attorney payments and medical and health care payments. A single-member LLC or a partnership is not exempt, which is why the W-9 matters.
What if I paid the contractor by credit card or a payment app?
Those payments are excluded from 1099-NEC and 1099-MISC reporting because the card processor or third-party network reports them on Form 1099-K instead. Payments by cash, check or ordinary bank transfer remain reportable.
What if I never collected a W-9 and the contractor will not respond?
Request it in writing and keep the record of having asked. Where a payee fails to furnish a correct taxpayer identification number, backup withholding at 24% is the mechanism the rules provide, which is why collecting the W-9 before the first payment is far easier than chasing it in January.
Educational information, not tax or legal advice. Rules change and every situation differs — confirm with your own tax professional. Figures cited were verified against IRS sources on 21 August 2026.