A contractor's books for the 2026 calendar year show $61,400 of wages paid to two payroll employees, and $1,800 paid to a licensed drywall subcontractor who is not an employee. Which year-end information returns must the contractor issue?
Explanation
Two rules meet here. The worker's status picks the form: an employee gets a Form W-2, a non-employee paid for services gets a Form 1099-NEC. The dollar threshold then decides whether the 1099-NEC is required at all. For tax years beginning after 2025 that threshold is $2,000, so the $1,800 paid to the subcontractor falls under it and no 1099-NEC is due. A Form W-9 travels the other way: the payer collects it from the payee to obtain a taxpayer identification number, and it reports no wages.
Law Reference: IRS, About Form W-2; IRS, Instructions for Forms 1099-MISC and 1099-NEC (rev. Dec. 2026)This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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