How to Create and File 1099s with QuickBooks Contractor Payments?

If you pay independent contractors, filing 1099s is not optional. It is a responsibility that directly impacts your tax compliance and business credibility. When a contractor earns $600 or more from you during the year, you are required to issue form 1099-NEC accurately and on time. Missing details, incorrect payment tracking, or filing errors can lead to penalties and unnecessary complications.

With QuickBooks Contractor Payments, you can simplify this entire process by keeping everything organized in one system. You can set up contractor profiles, collect and store W-9 information, track eligible payments, and ensure expenses are categorized correctly throughout the year. When tax season arrives, you are not starting from scratch. Instead, you can review payment summaries, confirm tax identification numbers, and generate 1099 forms directly within QuickBooks.

For the 2025 tax year (filed in 2026), businesses must stay aware of important 1099 filing deadlines. Form 1099-NEC must be sent to contractors and filed with the IRS by January 31, 2026, while form 1099-MISC must be filed by February 28, 2026, for paper filing or March 31, 2026, for electronic filing. Meeting these deadlines is essential to avoid penalties and maintain smooth tax reporting and compliance for your business operations.

In this blog, we will provide a clear, step-by-step guide to help you create and file 1099s using QuickBooks Contractor Payments. So, let’s get on with it.

State and Federal 1099s Filing Requirements in 2026 for QuickBooks Contractor Payments

Understanding federal and state 1099 filing rules is essential for businesses paying independent contractors in 2026 (for tax year 2025). While tools like QuickBooks Contractor Payments can streamline preparation and submission, compliance ultimately depends on meeting IRS deadlines, reporting thresholds, and state-level requirements. Below is a clear breakdown of what businesses must know before filing. 

A. Federal 1099 Filing Requirements for 2026

At the federal level, the IRS requires businesses to report certain non-employee payments using Form 1099-NEC or 1099-MISC. 

• $600 Reporting Threshold: Businesses must file Form 1099-NEC if they paid $600 or more to a non-employee for services during the tax year. 

• January 31 Deadline (Adjusted to February 2, 2026): Since January 31, 2026, falls on a Saturday, the filing and recipient distribution deadline moves to February 2, 2026.

• Paper vs. E-File Deadlines: Paper filings are generally due by early March, while electronic filings are typically due by March 31, 2026 (depending on the form type). 

• Payment Method Rules: Payments made via credit card or third-party processors are usually reported separately by the payment processor on Form 1099-K and should not be duplicated. 

B. State 1099 Filing Requirements in 2026

State reporting rules vary and may require additional action beyond federal filing. 

• Combined Federal/State Filing Program (CF/SF): Some states automatically receive 1099 data when it is filed federally through the IRS. 

• Separate State Filing Requirements: Certain states require businesses to submit 1099 forms directly to the state tax authority, even after federal filing.

• Different State Thresholds: Not all states follow the federal $600 threshold. Some may have lower reporting limits or additional requirements.

• State Deadlines May Differ: Filing due dates can vary by state, and late filings may trigger state-specific penalties. 

Penalties for Non-Compliance

Failing to meet federal or state 1099s requirements can result in penalties. 

• Late filing penalties increase based on how long the filing is delayed. 
• Incorrect information, such as mismatched TINs, may result in IRS notices. 
• Intentional disregard of filing requirements carries significantly higher fines. 

Now that you understand the key requirements and the potential consequences of non-compliance, let’s move ahead and walk through the step-by-step process of creating and filing 1099s using QuickBooks Contractor Payments. 

Steps to Create and File 1099s using QuickBooks Contractor Payments

If you pay contractors by cash, check, or direct deposit, you may need to file Form 1099-NEC with the IRS once payments meet the required threshold. Tracking these payments manually can be challenging, especially when managing multiple vendors. In the steps below, we will show you how to add your contractors and payments, create and e-file your 1099s, and check the filing status as well.

Step 1: Add and Verify Contractor Details and Payments

If you have used QuickBooks Contractor Payments to record contractor transactions throughout the year, most of the information needed for 1099 filing is already in your system.

Contractor not listed? Learn how to add and track them for 1099 filing.

A. QuickBooks Contractor Payments with QuickBooks Online

1. Open QuickBooks Online and navigate to the All Apps section.
2. Click on Payroll, then select Contractors.
3. Choose the contractor for whom you want to record a past payment.
4. Click the Pay with direct deposit dropdown menu.
5. Select Create expense from the options.
6. Enter the payment details carefully, review the information, and click Save and Close to record the transaction.

B. QuickBooks Contractor Payments without QuickBooks Online

There are 2 options:

a. To Add One Payment at a Time

1. Go to the Contractors menu and select Contractors.
2. Choose the contractor for whom you want to record a payment.
3. Click the Pay with direct deposit dropdown arrow.
4. Select Write Check from the available options.
5. Enter the details of the past payment accurately.
6. Review the information and click Save to record the transaction.

b. To Add Multiple Payments at Once

1. Go to Contractors and click on the Overview tab.
2. Select Record Payments to begin adding past transactions.
3. Choose the contractor or contractors for whom you need to enter payments.
4. Enter the required details for each past payment carefully.
5. Once you have added the payment information, click Record Payment.
6. Finally, confirm by selecting Record Payment again to complete the process.

Step 2: Create Your 1099s

Once you add and verify contractor details and payments, the next step is to create your 1099s. This is where you prepare your forms for e-filing or printing, depending on how you plan to submit them. Keep in mind that additional fees may apply if you choose to e-file through QuickBooks. Here are the steps:

1. Follow the instructions below based on the product you are using to begin the 1099 setup process:
   • If you use Contractor Payments with QuickBooks Online: Navigate to All Apps, then select Payroll, and click on Contractors to proceed.
   • If you use QuickBooks Contractor Payments only: Go directly to Contractors, and then select Contractors again to access the list and continue.
2. Click on Prepare 1099s to begin the setup process.
3. Review your company’s details, including your business name, email address, physical address, and Tax ID. Ensure they match the information on official IRS notices or letters. If updates are needed, select the Edit (✎) icon to make corrections.
4. Once all information is accurate, click Confirm Info and Get Started to proceed.
5. Next, choose Select Accounts, then review and confirm the accounts used to track your 1099 payments or expenses. Click Add to finalize your selection.
6. For each selected account, assign the correct 1099-NEC or 1099-MISC box based on the payment type, then click Next to proceed.
   • Note: Select the appropriate 1099 box based on the type of payment made. In most cases, businesses choose Nonemployee Compensation, Box 1 (1099-NEC). However, consult your accountant if you have issued other types of reportable payments.
7. Go to the Tracked for 1099 tab and select the contractors who should receive a 1099. Verify their personal details and update any incorrect information using Edit.
8. If a contractor is missing, check the Not Tracked for 1099 tab and select Add to tracked list, then return.
9. Review the Reportable Total for accuracy and click Next to continue.
   • Note: You may not see certain electronic payments, such as those made by credit card or PayPal, because they are reported separately by the payment processor or bank. If expected payments are missing, use the Reportable payments only dropdown and select Non-reportable payments only to view them.
10. Click Preview to review each 1099 form and verify the amounts shown in the appropriate boxes.
11. Select Continue to 1099-MISCs to review your 1099-MISC forms, then click Next.
12. Choose Continue to E-File. If you want to submit your 1099s electronically or select, I’ll print and mail if you prefer to file them manually.
    • Note: Keep in mind that the IRS limits the number of forms that can be submitted by paper filing.

Step 3: E-File Your 1099s

E-filing through QuickBooks is a secure and efficient way to complete your federal and, where applicable, state filings. After reviewing and finalizing your 1099 forms, the last step is to submit them electronically to the IRS. Here are the steps:

1. Once you have reviewed and confirmed that your 1099 information is accurate, select the E-File option to begin the submission process.
2. Follow the on-screen instructions to complete your federal filing and, if applicable, your state 1099 e-file. You will also have the opportunity to review each contractor’s 1099 before final submission.
   • If prompted, select how you would like to send copies to your contractors. Mailed forms may include additional fees. If this option does not appear, online access is already enabled. Make sure contractor email addresses are correct before proceeding.
3. Enter your billing details if required to complete the filing.

Note: Keep in mind that Copy A of Form 1099 is for your records only. Do not print or mail this copy to the IRS.

Step 4: Check Your Filing Status

After submitting your 1099s, you will receive email updates about your filing status. You can also check the status anytime within QuickBooks. Follow the steps:

1. Go to All Apps, select Expenses & Bills, then click 1099s to view your filing details.
2. Under Filing Status, you may see:
   • Not Submitted: Your Form 1099-NEC or 1099-MISC has not yet been e-filed with the IRS, and you can still make changes before submitting.
   • Submitted: Your form has been successfully sent to the IRS. If corrections are required, you may need to file a manual amendment following IRS instructions.
   • Received by IRS: The IRS has received your form and is either processing it or has already approved it. A confirmation email is generally sent within about a week after acceptance, though it may arrive in mid-January or later.
3. Select View 1099s to download and review a PDF copy for your records.

Creating and filing 1099s does not have to be complicated when you use QuickBooks Contractor Payments correctly. By adding and verifying contractor details, reviewing reportable payments, preparing your 1099 forms carefully, and completing the e-file process, you can handle your year-end reporting with greater accuracy and confidence.

Moving ahead, let’s now take a closer look at the steps required to create and file 1099s using QuickBooks Contractor Payments if you are working with QuickBooks Desktop.

Steps to Create and File 1099s using QuickBooks Contractor Payments If You Use QuickBooks Desktop

If you are using QuickBooks Desktop, you can easily prepare and file your federal and state 1099-NEC and 1099-MISC forms through QuickBooks Contractor Payments. The platform includes a built-in, time-saving feature that helps you generate 1099s using the contractor and payment information already recorded in your company file.

This feature is particularly helpful if you are filing straightforward 1099 forms, such as 1099-NEC, and want a more streamlined process. At present, QuickBooks Contractor Payments supports two payment types, so it is important to review your transactions and ensure they qualify for reporting within the system. Here are the steps:

Step 1: Pull the Entire List of 1099 Contractors and Payments from Your QuickBooks Desktop

Start by gathering a complete list of your 1099 contractors and the payments that qualify for 1099 reporting directly from QuickBooks Desktop. Reviewing this information in advance helps ensure that your totals are accurate before you begin the filing process. QuickBooks Desktop provides two built-in reports to simplify this review.

• 1099 Summary: It displays total amounts assigned to each 1099 box and lets you filter results by vendor, account, or reporting threshold.

• 1099 Detail: It provides a breakdown of individual payments made to vendors, with additional filtering options for 1099 vendors and related accounts.

Here are the steps to create these reports successfully:

1. Open your QuickBooks Desktop and navigate to your company file.
2. Click on Reports, then choose Vendors & Payables.
3. Select either 1099 Summary or 1099 Detail, depending on the level of information you need.
4. Set the appropriate date range to match the tax year for your 1099 filing.

Review the report to see which contractors qualify for 1099s. If you notice missing contractors or incorrect amounts, you may need to correct those issues before finalizing your forms.

Step 2: Add Your Contractors and Payments to QuickBooks Contractor Payments

Note: If you have not already enrolled, make sure to sign up for QuickBooks Contractor Payments separately, as it can be used without subscribing to QuickBooks Online.

1. Open your QuickBooks Contractor Payments.
2. Navigate to the Contractors sections and then click on Contractors.
3. Now, click on select Add a contractor.
4. Enter the contractor’s name and email address. If you prefer the contractor to provide their own details, select the Email this contractor checkbox.
5. Click Add Contractor to save the information.

If you choose to send the email, wait for the contractor to complete and submit their information.

If you did not choose to send the email:

1. Click Add next to Personal Details or Bank Account, then enter the required contractor information.
2. Once you have completed the details, click Save to confirm.

Now, add your contractor payments to QuickBooks Contractor Payments. You have 2 options here:

A. To Add One Payment at a Time

1. Open QuickBooks Contractor Payments.
2. Click on Contractors, then select Contractors again to view the list.
3. Choose the contractor for whom you want to record a payment.
4. Select the Pay with direct deposit dropdown menu and choose Write Check.
5. Enter the required payment details to complete the transaction.
   • Enter the total amount you paid the contractor for the year.
   • From the Category dropdown, select either Contractor Payment or Contractor Reimbursement, as only these two payment types are currently supported.
   • Specify the appropriate Pay Date within the relevant tax year.
6. Once you’re done with these, click Save and repeat the same steps for all the contractors you have paid.

B. To Add Multiple Payments at Once

1. Open QuickBooks Contractor Payments.
2. Click on Contractors, then go to the Overview tab.
3. Select Record Payments to begin adding transactions.
4. Choose the contractor or contractors you want to record payments for.
5. Enter the payment details for each selected contractor.
   • Enter the total amount you paid the contractor during the year.
   • From the Category dropdown, choose either Contractor Payment or Contractor Reimbursement, as only these two payment types are currently supported.
   • Specify the appropriate pay date within the relevant tax year.
6. Finally, select Record Payment twice.

Step 3: Create Your 1099s

The next step is to generate your 1099 forms using QuickBooks Contractor Payments in QuickBooks Desktop. Follow the same process outlined earlier in Step 2: Create Your 1099s to review contractor details, verify reportable totals, and prepare your forms accurately before submission.

Step 4: E-File Your 1099s

Once your forms are prepared and reviewed, proceed with e-filing through QuickBooks Contractor Payments. You can refer to the earlier section on Step 3: E-File Your 1099s for detailed guidance on submitting your forms to the IRS, confirming filing details, and completing the process securely. Also, don’t forget to check your filing status as well.

So, these are the steps that can help you to accurately create, review, and file your 1099s using QuickBooks Contractor Payments with confidence and compliance.

Common 1099s Filing Mistakes to Avoid While Using QuickBooks Contractor Payments

Filing 1099s through QuickBooks Contractor Payments can streamline your year-end reporting, but small mistakes can lead to inaccurate forms, IRS notices, or rejected filings. Many mistakes happen not during filing, but throughout the year when contractors are set up or payments are recorded incorrectly. Understanding these common pitfalls in advance can help you stay compliant, avoid penalties, and ensure a smooth e-filing experience. 

Here are some of the most common mistakes that users make while filing their 1099s by using QuickBooks Contractor Payments. 

1. Misclassifying Workers as Contractors Instead of Employees

One of the most serious mistakes is incorrectly classifying a worker as an independent contractor when they should be treated as an employee. Employees must receive a W-2, not a 1099s. Misclassification can lead to tax penalties, back payroll taxes, and compliance issues. Always review IRS guidelines before setting up a worker profile in QuickBooks.

2. Not Enabling 1099 Tracking Early

If 1099s tracking isn’t enabled in QuickBooks before payments are recorded, some transactions may not appear in your 1099s reports. Turning this feature on at the beginning of the year ensures that eligible payments are tracked accurately from day one.

3. Incorrect Expense Account Mapping

QuickBooks requires proper mapping of expense accounts. If payments are posted to unmapped or incorrectly mapped accounts, they won’t be included in the contractor’s total. Reviewing and confirming account mapping before filing is essential to prevent underreporting.

4. Waiting Until the Last Minute to Review Totals

Rushing through the filing process increases the risk of errors. Waiting until January to review an entire year’s worth of payments can make corrections more complicated. It’s best practice to reconcile contractor payments periodically throughout the year.

5. Failing to Verify Contractor Information

Missing or incorrect Tax Identification Numbers (TINs), legal names, or addresses can lead to IRS rejections. Always collect and review Form W-9 from contractors before issuing payments and confirm that the details entered in QuickBooks match the official documentation. 

Conclusion

Filing 1099s form does not have to be a complicated or stressful process when you use QuickBooks Contractor Payments correctly. By organizing your contractor details, reviewing eligible payments, running 1099 reports, and carefully preparing your forms, you can ensure your information is accurate before submission. Whether you are using QuickBooks Online or QuickBooks Desktop, the built-in tools are designed to simplify tracking, reporting, and e-filing.

Taking the time to verify totals, confirm contractor information, and understand filing statuses can help you avoid common errors and potential IRS penalties. A structured approach not only saves time during tax season but also keeps your financial records clean and audit-ready throughout the year. By following the steps outlined in this guide, you can streamline your 1099s filing process and stay compliant while focusing more on running and growing your business.

Frequently Asked Questions