Tax & Compliance

Get ready for 1099s before January: vendors, W-9s and the new $2,000 threshold

For payments made in 2026, the 1099-NEC and most 1099-MISC thresholds rose from $600 to $2,000. Fewer vendors need a form, but you still need the right ones, a W-9 for each, and a clean name and TIN before the February 1, 2027 deadline. The workbook sorts vendors; AI maps your AP export and drafts the W-9 requests.

Time
About an hour to set up, then 15 minutes a month
Level
Beginner
Works with
Excel, Claude, ChatGPT, Microsoft Copilot

What you need

  • A vendor payment export for the calendar year to date: vendor ID, payment date, amount, payment method and GL account or memo
  • Your vendor master: vendor ID, name, entity type from the W-9, and whether a W-9 is on file
  • The free 1099 Readiness Tracker (download on this page)

Steps

  1. Export vendor payments for the year to date and your vendor list. Leave out TINs, SSNs and bank details; the tracker only needs to know whether you have a W-9.
  2. Paste the prompt below into your AI tool with the exports attached. It assigns each payment a 1099 category from the GL account or memo and returns rows ready to paste.
  3. Paste vendors into the Vendors tab and payments into the Payments tab. Formulas total each vendor by 1099 box, apply the thresholds and the corporation exemption, and leave out card and PayPal payments.
  4. Work the Summary tab: get W-9s from every vendor that needs a 1099 or is close to the threshold, and run IRS TIN Matching on the rest.
  5. Use step 2 of the prompt to draft the W-9 request emails. A person reviews them before anything is sent.
  6. Update the tracker monthly through December, freeze it in mid-January, and have a second person review the totals before filing.

The prompt

Fill in the highlighted brackets
You are an accounts payable specialist preparing for year-end 1099 reporting. You categorize and draft. You do not total or decide who needs a 1099: the workbook's formulas do that.

Context:
- Company: [company name]
- Tax year: [2026]
- Accounting system: [QuickBooks / NetSuite / other]

Attached: the vendor payment export and the vendor list.

Step 1. Return two tables, ready to paste:
Vendors: Vendor ID, Vendor name, Entity type (from the W-9, one of: Individual / sole proprietor, Single-member LLC, Partnership, LLC taxed as partnership, C corporation, S corporation, LLC taxed as C corp, LLC taxed as S corp, Tax-exempt / government, Foreign (W-8)), W-9 on file? (Y/N), Attorney? (Y/N)
Payments: Vendor ID, Payment date, Amount, Payment method (Check, ACH, Wire, Zelle / bank transfer, Credit card, Debit card, Gift card, PayPal / Venmo business, Cash), Category (Services, Attorney fees, Rent, Royalties, Prizes and awards, Other income, Medical and health care, Attorney gross proceeds, Merchandise / goods, Not reportable)
Rules: copy amounts and dates exactly; do not total or round. Choose the category from the GL account and memo. If it isn't clear whether a payment is for services or goods, use your best category and list the payment under REVIEW with the reason. If an entity type isn't in the vendor list, leave it blank and list the vendor under MISSING W-9 INFO. Never guess an entity type from a vendor's name.

Step 2. When I paste the vendors marked "get W-9" or "Near threshold" from the tracker, draft one short, polite email per vendor asking for a completed Form W-9, with a link to the IRS form (irs.gov/FormW9), a reply-by date of [date], and a line saying we can't send a 1099 or may have to withhold without it. Ask them to send it through [our secure upload link / a phone call], never as plain email with the TIN.

Do not give tax advice. Where a rule depends on the facts, say so and suggest checking the IRS instructions or a tax adviser.

Review before you use it

  • Spot-check the categories AI assigned, especially services vs. goods and anything listed under REVIEW.
  • Entity types come from the W-9 itself, not from the vendor's name. "Inc." on an invoice is not proof of a corporation.
  • Attorneys get a 1099 even when the firm is a corporation; so do medical and health care providers.
  • Totals on the Vendors tab agree to the AP vendor ledger for a few of the largest vendors.
  • W-9 request emails don't ask anyone to email their SSN or TIN in plain text.

Never paste into an AI tool

  • Taxpayer identification numbers, SSNs or EINs
  • Vendor bank account and routing numbers
  • Completed W-9 forms
  • IRS e-Services or TIN Matching login details

Tips

  • Start in November. The $2,000 threshold means fewer forms, but W-9s still take weeks to collect, and a missing W-9 can mean 24% backup withholding on future payments.
  • Make a W-9 part of vendor setup going forward: no W-9, no first payment.
  • Payment date, not invoice date, decides the tax year. A December invoice paid in January counts toward next year.

Educational content, not professional advice. AI output can be wrong; review it before relying on it. Disclaimer

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