The 1099-NEC Year-End Checklist for Therapy Agency Owners (2026 Filing)
January is the worst possible month to discover that a therapist’s W-9 was never collected, or that the only record of what you paid someone lives scattered across eleven months of bank transfers. The work that makes 1099 season painless is work you do in October, November, and December.
Here is the checklist, with the 2026 rules — which include a significant change that most year-end articles still get wrong.
What changed for 2026
The federal reporting threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000 for payments made on or after January 1, 2026, and will be adjusted for inflation beginning in 2027. If an article tells you the threshold is $600, it’s describing the old rule. Two cautions: state thresholds may not match the new federal one, and filing a form you weren’t strictly required to file is cheap protection — see the Section 530 note below.
The Dates That Matter
- January 31 — Form 1099-NEC is due both to the recipient and to the IRS. Unlike some information returns, there is no later deadline for the IRS copy. One date, both jobs.
- Ten or more returns means you must e-file. The electronic filing threshold is 10, counted by aggregating all your information returns, not 10 of any single type. Most agencies with a handful of therapists plus other reportable payments land over the line faster than they expect.
- Now through December — the window to collect missing W-9s while you still have the therapist’s attention and, if needed, leverage over an outstanding payment.
Who Actually Needs a Form
This is where therapy agencies have a wrinkle that general small-business advice misses.
That second row is the one to slow down on. The familiar rule — “you don’t send a 1099 to a corporation” — has a carve-out for medical and health care payments, which are reported in box 6 of Form 1099-MISC and are not covered by the corporate exemption. An agency paying an incorporated PT for patient visits can easily fall inside that carve-out. Whether your particular payments belong in 1099-NEC box 1 or 1099-MISC box 6 is a question for your CPA; the expensive mistake is assuming that an incorporated therapist means no form at all.
The October–December Checklist
Should You File Below the Threshold Anyway?
Often, yes — and this is the part worth raising with your CPA. Under Section 530, a business that treats therapists as contractors keeps its safe-harbor protection against back employment taxes only if it has reporting consistency: all required Forms 1099 actually filed for those workers. Separately, if the IRS ever reclassifies a worker, the reduced assessment rates under IRC section 3509 are meaningfully lower when the required forms were filed — roughly 10.68% of wages versus about 13.71%.
Against that, the marginal cost of filing one extra form for a per-diem therapist who earned $1,400 is close to zero. The threshold tells you the minimum; your risk posture may argue for more. We walk through that tradeoff in detail in what to do when a 1099 therapist might have been an employee.
If You Get It Wrong
Corrected returns exist and are routine — a wrong amount or a wrong TIN is fixed by filing a corrected form, not by hoping nobody notices. Penalties for late or incorrect information returns generally scale with how long you take to fix them, so a correction filed promptly costs far less than one filed under inquiry. If a form is simply missing, file it late rather than not at all; the Section 530 and section 3509 consequences of an unfiled return outlast the penalty.
The Real Fix Is Not a January Fix
Every item on that checklist is easy if the information was captured as the year happened, and miserable if it wasn’t. The agencies that find January uneventful share a few habits:
- No first payment without a W-9. Make it a hard gate, not a reminder.
- Pay from visit records, not from memory. When each visit carries its therapist, date, type, and agreed rate, the year-end total is a sum rather than an investigation.
- Keep running year-to-date totals per contractor. If you can’t answer “what have we paid this therapist this year” in under a minute in July, January will be a project.
- Store the contractor file in one place — W-9, signed agreement, license, certificate of insurance, and payment history together.
That is precisely the gap 1099 therapist payment software is meant to close: visits logged once by the therapist, per-visit rates applied automatically, and year-to-date totals that are current every day of the year — so 1099 season becomes a report you pull and hand to your CPA, rather than a week of reconstruction. For the mechanics of paying contractors correctly during the year, see our step-by-step guide to paying 1099 therapist contractors.
Frequently Asked Questions
For payments made on or after January 1, 2026, the federal reporting threshold for Forms 1099-NEC and 1099-MISC is $2,000, raised from the long-standing $600 threshold. Beginning in 2027 the amount is adjusted annually for inflation and rounded to the nearest $100. State thresholds do not necessarily match the federal one, so agencies should confirm their state's requirement separately.
January 31. Form 1099-NEC must be furnished to the recipient and filed with the IRS by that same date, whether filed on paper or electronically. Filing ten or more information returns in total, aggregated across all types, makes electronic filing mandatory.
Often yes. Payments to a corporation are generally exempt from 1099 reporting, but that exemption does not apply to payments for medical and health care services, which are reported in box 6 of Form 1099-MISC. A therapy agency paying an incorporated PT, OT, or ST for patient visits can fall within that exception. Whether a specific payment belongs on 1099-NEC box 1 or 1099-MISC box 6 is worth confirming with a CPA, but assuming that incorporation means no form at all is a common and costly error.
A TIN is considered missing if it is not provided or is not nine digits, and incorrect if the name and TIN combination cannot be matched to IRS or SSA files. Nonemployee compensation is subject to backup withholding at 24% if the payee has not furnished a TIN or the IRS notifies the payer of a mismatch. Collecting and verifying W-9 information before the first payment avoids this entirely.
It is worth discussing with a CPA. Section 530 safe harbor protection against back employment taxes requires reporting consistency, meaning all required Forms 1099 were filed for those workers, and if a worker is later reclassified the reduced rates under IRC section 3509 are lower when the forms were filed, roughly 10.68% of wages versus about 13.71%. Because the cost of filing an additional form is minimal, many agencies file above the strict minimum as protection.
Not legal or tax advice. This article is general information for agency owners, not legal, tax, or employment advice. Worker classification and information-reporting rules are fact-specific and change. Figures here reflect federal rules for the 2026 tax year; state rules differ. Confirm your own situation with a CPA or employment attorney before acting.