IRS Updates Form 1099-NEC for 2026 Reporting

The revised Form 1099-NEC introduces new reporting requirements for tips and overtime compensation beginning with the 2026 tax year.

The IRS has released a preview of the 2026 Form 1099-NEC, introducing several new reporting fields that may require businesses to update their payroll and information reporting processes. The revised form will be used to report 2026 payments, with filing beginning in January 2027.

The revised form adds new boxes for reporting cash tips and overtime compensation, as well as fields for Treasury Tipped Occupation Codes (TTOCs). It also includes existing reporting requirements for non-employee compensation, direct sales, federal income tax withholding, excess golden parachute payments, and state tax information.

Under the revised form:

• Box 1a reports nonemployee compensation.
• Box 1b reports cash tips.
• Box 1c reports up to two Treasury Tipped Occupation Codes (TTOCs).
• Box 1d reports overtime compensation.
• Boxes 5–7 continue to capture state tax information.

While the reporting requirements do not take effect until the 2026 tax year, businesses should begin evaluating whether their payroll, accounting, and information reporting systems can capture the additional data that will be required.

The IRS releases information return forms well in advance so businesses know what information they need to collect during the reporting year. Additional instructions and guidance are expected, particularly regarding the reporting of cash tips, Treasury Tipped Occupation Codes (TTOCs), and overtime compensation.

Your Keiter Opportunity Advisors are monitoring future IRS guidance and will keep you informed as additional details become available.

Source: Checkpoint | Thomson Reuters

Payroll Guide References:

• Payroll Guide ¶4271 – Form 1099-NEC
• Payroll Guide ¶4264 – Information returns and nonemployee payments, Forms 1099
• Payroll Guide ¶4040 – Backup withholding
• Payroll Guide ¶2300 – Worker classification