1099 Threshold for Therapists

For decades, the rule was simple. Pay a contractor $600 or more in a year, send them a 1099.

That number just changed. Starting with payments made in 2026, the line is $2,000.

It sounds like a nice break, and for some practices it is. But we've already heard owners say "so I don't really need to worry about 1099s anymore." That's the part that worries us.

Here's the short version of the new 1099 threshold for therapists: fewer small vendors need a form, your contract clinicians almost certainly still do, and the January deadline hasn't moved.

This coming January is the first filing season under the new rule. So let's walk through what's different, what isn't, and what to do in December so January stays calm.

What changed with the 1099 threshold for therapists

The federal tax law passed in July 2025 raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000.

Three details matter:

It applies to payments made after December 31, 2025. So it covers everything you pay in 2026, which you report in January 2027. The forms you filed last January, for 2025 payments, still used $600.
It's an annual total per person. Not per invoice, not per month. Everything you paid one contractor or vendor during the calendar year.
It will move with inflation. Starting with years after 2026, the IRS can adjust the $2,000 for inflation, so expect the number to creep up over time.

The IRS confirms the change on its Form 1099-NEC and independent contractors page: report payments totaling $600, or $2,000 for payments made after December 31, 2025.

What doesn't change: your contract clinicians

If you pay clinicians as 1099 contractors, this change probably won't touch them at all.

Say a contract clinician earns $70 a session and sees 20 sessions a week. That's $1,400 in one week. They clear $2,000 before the end of their second week.

So for nearly every contract clinician on your team, the form is still required, the deadline is still the same, and you still need their W-9.

The same goes for other big recurring payments. If you rent your office from an individual landlord at $2,500 a month, that's $30,000 for the year, well over the line.

The new threshold doesn't really change your clinician 1099s. It changes your vendor 1099s.

Where the new threshold actually helps

The relief shows up with the small, occasional payments that used to cross $600 without anyone noticing.

Think about:

A guest speaker you paid $500 for a staff training
A handyman who did one repair
A consultant you hired for a single project under $2,000
A part-time contractor who helped for a few weeks

Under the old rule, any of those could have pushed past $600 and meant chasing a W-9 in January. Under the new rule, if the total for the year stays under $2,000, there's no form to send.

For a group practice, that can mean a noticeably shorter 1099 list. Less chasing, less paperwork, fewer forms that cost money to file.

The trap: small payments still add up

Here's where we expect practices to get caught.

The threshold is a yearly total, and most small recurring payments don't look like much one at a time.

Take someone who cleans your office twice a month and bills $175 a month. No single payment is anywhere close to $2,000. But $175 × 12 is $2,100. They're over.

Now take the same person at $150 a month. That's $1,800 for the year. Under.

That $25 a month difference decides whether you owe a form. You won't see it by looking at any one invoice. You'll only see it by looking at the total by vendor for the year.

That's a bookkeeping question, not a tax question. If your contractor and vendor payments are recorded to the right vendor in QuickBooks all year, this is a five minute report in December. If they're lumped together, it's a January scavenger hunt.

Still get the W-9 up front

The other trap is deciding you can skip W-9s for small vendors.

In February, you don't know who will cross $2,000 by December. A vendor you expected to use once ends up being your go-to. A contractor you hired for a month stays for six.

So the habit doesn't change: collect a W-9 before the first payment, from anyone you pay as a contractor or vendor. It takes a minute when they're eager to get paid. It can take weeks to track down in January.

There's also a backup reason. If someone crosses the line and never gave you a taxpayer ID number, the rules can require you to withhold part of their payments for the IRS. Nobody wants to set that up mid-year. A W-9 on file avoids it.

Where it gets tricky

A few edge cases are worth knowing. None of these are reasons to panic, but they're good reasons to check with your CPA before you skip a form.

Corporations are usually exempt, with exceptions. Payments to corporations generally don't need a 1099, but there are exceptions, including some payments for legal and health care services. If a vendor's W-9 says corporation, confirm before you skip them.
Card and app payments are reported differently. Payments you make by credit card or through certain payment apps generally aren't reported on your 1099-NEC, because the payment company handles that reporting. Keep track of how you paid each vendor so you don't double count.
Your state may have its own rules. Some states require their own 1099 filings. Follow your state's requirements along with the federal ones.
Getting paid is a separate rule. The 1099-K that card processors send you has its own threshold, now back to $20,000 and 200 transactions. If you don't get one, that doesn't mean the income goes unreported. Your books should show every dollar either way.

Your December to January plan

The deadline for sending 1099-NECs to contractors and filing them with the IRS is still January 31. In 2027, January 31 lands on a Sunday, so the practical due date is Monday, February 1. Don't plan on the extra day.

Here's how to keep it calm:

Early December: pull the list. Run a report of everything you paid each contractor and vendor in 2026. QuickBooks Online has 1099 reports built for this.
Flag everyone at $2,000 or more. Leave out anything you paid by credit card or through a payment app.
Check for a W-9 on each flagged name. Missing ones go out in December, while people are still answering email.
Watch your total count. If you're filing 10 or more information returns in total, the IRS requires you to file electronically.
January: send and file. Contractor copies and IRS filing by the end of the month.

For our clients, this mostly happens in the background. Our bookkeepers keep contractor and vendor payments tied to the right vendor all year, so the list is ready to pull in December. And clients who'd rather hand off the filing itself can ask their CRM to add it.

If you want the full year end picture, our year end checklist for therapy practices covers 1099s along with everything else worth doing before December 31.

Quick recap

The 1099 threshold for therapists moved from $600 to $2,000 for payments made in 2026. It's a yearly total per person, it'll be adjusted for inflation going forward, and the first filing season under the new rule is this January.

Your contract clinicians almost certainly still get a 1099. Small, occasional vendors may not. The trap is the small recurring payment that quietly adds up past $2,000, and the fix is clean books by vendor plus a W-9 before the first payment.

If you're heading into January not sure your books can produce that list, let's talk. A discovery call is free and there's no pressure. We'll look at how your practice is set up and tell you honestly what would make next year's 1099 season easier.

Nate

Straight from the source: the IRS page on forms and associated taxes for independent contractors, which covers W-9s, 1099-NECs, and backup withholding.