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US · 1099-NEC · Verified

1099-NEC

1099 Withholding and Backup Withholding Calculator

Two questions get mixed up, and only one of them costs you money. Does my client withhold tax? No, not as a rule — there is no box on the form for it. Can they withhold anyway? Yes, at 24%, if you never gave them a taxpayer identification number. This page works out both.

Prepared for the 2026 tax year.

The threshold moved. For tax years beginning after 2025 the amount that triggers a 1099-NEC rose from $600 to $2,000 under — so payments that used to generate a form no longer do.

Your TIN is your Social Security number or, if you have one, your EIN. Giving it on Form W-9 is what stops backup withholding.
Payments to a corporation are generally exempt from 1099-NEC reporting — except legal services, which are reportable whatever the entity.
Domestic work goes on Schedule H with a different threshold, and the payer owes employment tax on it either way.

Enter what one client paid you, and whether they have your tax identification number. The page tells you whether a 1099-NEC is required, and what backup withholding takes out if it is.

Backup withholding $0
You actually receive $0
Is a 1099-NEC required? —
Reporting threshold $2,000 For tax years beginning after 2025. It was $600 before.
Effective rate withheld 0%

What comes next? Backup withholding is a credit against your tax, not a fee — you get it back when you file, if you do not owe it. The Tax Set-Aside Calculator shows what you still owe on the money that arrives intact.

Working out whether to be a contractor at all? The 1099 vs W-2 Calculator compares take-home on the same gross, including the payroll tax an employer would have paid.

Where these figures come from

Reporting threshold
$2,000 ·
Backup withholding rate
24% · IRC §3406(a)(1), which sets the rate by reference to §1(c) rather than stating a number · Pub. 1099 (2026)
When it applies
IRC §3406(a)(1)(A)–(D) · Pub. 1099 (2026), Backup Withholding
Domestic work
Schedule H threshold · IRS Pub. 926
Verified
4 October 2026
How this is worked out

Two separate rules, and the page keeps them apart: one decides whether a form is required, the other decides whether tax is taken out of the payment. They share a threshold but they are not the same rule.

Reporting threshold
Payment to a non-employee of $2,000 or more in a calendar year
IRC §6041(a), as amended by P.L. 119-21 §70433(e)
This is the figure that moved. The statute read "of $600 or more" until P.L. 119-21 replaced it with "$2,000 or more in any calendar year". The heading was rewritten to "Payments exceeding threshold" at the same time, which is why the number now lives in the body of the section.
Backup withholding
The fourth lowest rate of tax under §1(c) × the payment
IRC §3406(a)(1)
24% is a result, not a figure in the statute. §3406 sets the rate by reference to the rate schedule, so it moves if the schedule moves, without the section being amended.
When backup withholding starts
Payee fails to furnish a TIN, or the IRS notifies the payer the TIN is wrong
IRC §3406(a)(1)(A)–(B)
The 60-day waiting period
Applies to interest and dividend payments only
Pub. 1099 (2026), When to apply backup withholding
Publication 1099 states that any other payment, such as nonemployee compensation, is subject to backup withholding even if the payee has applied for and is awaiting a TIN. There is no grace period on a 1099-NEC.

The formulas are shown as the authority defines them, in its own terms — the arithmetic is not copyrightable and the rates are public-domain US government material. What these lines cannot tell you is where your figures came from; that is what the table above is for.

What the threshold change actually means

Before 2026, a client who paid you $600 or more in a year had to send you a Form 1099-NEC and file a copy with the IRS. That figure is now $2,000. The change came in P.L. 119-21, which rewrote the heading of IRC §6041 from "of $600 or more" to "exceeding threshold" and put the new figure in the body of the section.

Two things follow, and they pull in opposite directions. On one side, a small client no longer has to file — which means you may not get a form, and a payment the IRS never sees is a payment you still have to declare. On the other, the threshold going up does not mean the income went away. Your obligation to report what you were paid does not depend on receiving a 1099.

Why this is not a withholding question

Almost every search on this topic asks whether the client will withhold tax. The answer is no, and it is no by design. A contractor is not an employee, so the payer has no withholding obligation and Form 1099-NEC has no box for voluntary federal withholding. You receive the whole amount and you pay the tax yourself — which is what the quarterly estimated payments are for.

Backup withholding is the exception, and it is closer to a penalty than a deduction. It exists to stop income escaping the system when the payer cannot report it against a valid number.

Frequently asked questions

Will my client withhold tax from my payment?

No, unless you triggered backup withholding. There is no routine withholding on payments to an independent contractor, and no box for it on Form 1099-NEC. If you are seeing less than the invoiced amount, it is one of three things: backup withholding at 24%, a fee the payer charged, or a state withholding rule — and only the first appears on the form, in box 4.

Do I get 60 days to send my TIN once I have applied for it?

Not if you are being paid as an independent contractor, and this is the detail most summaries leave out. The 60-day waiting period applies to interest and dividend payments and to certain readily tradable instruments. Publication 1099 (2026) says it directly: any other payment, such as nonemployee compensation, is subject to backup withholding even if the payee has applied for and is awaiting a TIN. If you have applied and are waiting, do not assume you are covered — ask the payer to hold the payment, or accept the 24% and claim it back.

Do I get the withheld money back?

Yes, as a credit against your tax, when you file. Backup withholding is not a fee and it is not lost — it is reported in box 4 of the 1099-NEC and on the 1099 you receive, and it comes off your total tax like any other payment. If it turns out to exceed what you owed, the difference is refunded. What it costs you is the cash flow, for up to a year.

Is the 24% a fixed rate?

The number is 24%, but the statute does not say "24%". IRC §3406(a)(1) sets the rate at the product of the fourth lowest rate of tax applicable under section 1(c) and the payment. That works out to 24% under the current brackets, and the instructions and Publication 1099 both state 24% for 2026. It is worth knowing it is derived rather than fixed, because a change to the rate schedule changes this rate without §3406 being amended.

What if the payment is under $2,000?

There is normally no 1099-NEC and normally no backup withholding — the threshold covers both. But it is not a universal floor: the instructions name payments to an H-2A visa worker who has not given a valid TIN as subject to backup withholding regardless of the amount of the payment. And the threshold is about reporting, not about what you owe. Under $2,000 still goes on your Schedule C.

The four things that decide it

Everything above comes down to four facts, which is why the form on this page asks for four and no more.

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