A School's Guide to Issuing 1099s: What You Need to Know Before January 31

As the calendar year wraps up, one task moves to the top of your to-do list: issuing Form 1099-NEC. If you're feeling unsure about who should get one, what amounts to report, or how to handle those gray-area vendors - this post is for you. 

Here's a clear, school-specific guide to help you get through 1099 season confidently and compliantly. 

W-2 vs. 1099: What's the Difference?

Let's start with the basics:

• W-2s are for employees paid through payroll. These are people on your staff whose taxes are withheld throughout the year. 
• 1099-NEC forms are for non-employees who were paid $600 or more for services - like contractors, referees, or repair technicians. 

If someone worked for the school but was never on payroll, there's a good chance they belong in the 1099 group.

Start With the Right Information: The W-9

Before you can decide whether a 1099 is needed, you'll need vendor info.

That's where Form W-9 comes in.

• Form W-9 tells you:
  • Legal name of the vendor
  • Business type (individual, LLC, S-Corp, C-Corp, etc.)
  • Taxpayer Identification Number (TIN)
  • Whether they're likely to need a 1099

If you haven't already collected W-9s for your vendors, now is the time.

How to Identify Vendors Who Should Receive a 1099

If your software doesn't automate this, here's a quick system to follow:

Step 1: Review all vendors paid during the calendar year

• Exclude anyone paid only for materials, supplies, or products.
• Focus on service-based payments like:
  • Independent contractors
  • Referees
  • Guest speakers or consultants
  • Repairs or maintenance work
  • Rent for buildings or land

IRS Rule: 1099-NEC is required for $600 or more in services performed in the course of your trade of business (including government).

Step 2: Exclude C-Corps and Exempt Organizations

You typically don't issue 1099s to:

• C-Corporations
• S-Corporations (although there are exceptions)
• Nonprofits or government agencies

Check the W-9 to see the vendor's business type.

If you don't have one, you may be able to confirm incorporation on their website or the Secretary of State's business search.

When in doubt: It's okay to issue a 1099 even if you're unsure - it's better to over-report than under-report.

Step 3: Report Only the Labor Portion (not materials)

If a vendor's invoice includes both labor and materials - only report the labor portion.

For example:

• A plumber sends an invoice for $1,600: $1,000 for parts and $600 for labor.
• You only include the $600 labor on the 1099.

This avoids overstating income and helps your vendor stay accurate on their end too.

Special Note: Dual Role Workers (W-2 + 1099)

Sometimes an employee takes on a side role - like coaching a camp or refereeing a game.

If that service isn't part of their employment contract, it may need to be reported separately on a 1099-NEC (if it exceeds $600 for the year). 

Yes - it's possible (and allowed) for a person to receive both a W-2 and a 1099 in the same year, for different types of work. 

1099 Filing Deadlines & Tools

• Forms must be provided to recipients by January 31.
• You'll also file a Copy A with the IRS, either electronically or by mail
• Most accounting software has a built-in tool or integration (like with Track1099 or Tax1099)

Tip: If you file late or fail to file altogether, the IRS may assess penalties - especially for larger volumes or intentional disregard.

Need help? Ask early. 

If you're stuck on a vendor or invoice, don't wait until the last minute.

Reach out to your auditor, bookkeeper, or software support early in the process. A five-minute conversation now could save hours later. 

Final Thoughts: Build Better Systems for Next Year

Once you've made it through 1099 season, take a few minutes to improve your process:

• Make W-9s a standard part of your vendor setup
• Flag 1099-eligible vendors in your accounting system
• Keep notes on split invoices or unusual circumstances

A little extra structure now makes next January so much easier.