# Form 1099-NEC > Form 1099-NEC reports affiliate commissions and other payments for services. Learn the thresholds, how it differs from 1099-MISC, and which forms to collect. - URL: https://growsurf.com/glossary/form-1099-nec/ --- [← View All Terms](/glossary/) Form 1099-NEC is the US tax form a business files to report nonemployee compensation, including affiliate commissions and other payments for services, to the IRS and to the person paid. It applies once a recipient's payments for the year reach the IRS threshold. If your business pays affiliates, you are paying people for a service, and the IRS wants to know about it. Form 1099-NEC ("nonemployee compensation") is how you report those payments. It replaced the old Box 7 of Form 1099-MISC in 2020 and is now the standard form for contractors, freelancers, and affiliates. ### Who Gets a 1099-NEC Anyone who is not your employee and whom you paid for services during the year, once their total reaches the threshold. For a referral or affiliate program, that means: - **Affiliates** earning [commissions](/glossary/affiliate-commission/) for promoting your product. Commissions are payment for services. - **Professional referrers** such as agencies, consultants, or partners paid a referral fee as part of their business. Rewards paid to ordinary customers for referring a friend are usually not services. They are typically treated as prizes, awards, or other income and belong on Form 1099-MISC instead. See [affiliate payout](/glossary/affiliate-payout/) for how programs handle both. ### Thresholds The reporting threshold is based on the year the payment was made, not the year you file: - **Payments made in 2025:** $600 or more - **Payments made in 2026 and later:** $2,000 or more, adjusted for inflation after 2026 The threshold applies separately to Form 1099-NEC and Form 1099-MISC. $500 of commissions and $1,500 of referral prizes do not combine to trigger either form. Amounts across several programs do combine when they are paid by the same payer and belong on the same form. ### 1099-NEC vs. 1099-MISC | | Form 1099-NEC | Form 1099-MISC | | --- | --- | --- | | What it reports | Payment for services | Prizes, awards, other income | | Typical program | Affiliate program | Customer referral program | | Example | $1,200 in commissions to an affiliate | $700 in gift cards to a referring customer | The distinction is why the person was paid, not what the program is called. A commission is compensation. A thank-you gift card is not. ### What You Need to Collect - **Form W-9** from US recipients: legal name, address, and taxpayer identification number. - **Form W-8BEN or W-8BEN-E** from recipients outside the US. They do not receive a 1099, but you need the form on file to show why. Collect the form before the payout that would cross the threshold, not in January when you are trying to file. A program that pays out without a valid form on file has a problem it cannot easily fix later. ### Deadlines Form 1099-NEC is due to both the IRS and the recipient by January 31 of the following year. Filing late or with a missing tax ID carries penalties per form. ### Payment Processors and Form 1099-K When commissions are paid through a card network or a third-party settlement service, the processor may report them on Form 1099-K. Check how each payout method is treated so the same commission is not reported twice. This page is general information, not tax advice; confirm your obligations with a qualified tax professional. ## Related Terms [Affiliate Payout An affiliate payout is the process of disbursing earned commissions to affiliate partners, typically on a set schedule and through a…](/glossary/affiliate-payout/) [Affiliate Commission An affiliate commission is the payment an affiliate earns for successfully driving a desired action—such as a sale, lead, or…](/glossary/affiliate-commission/) [Affiliate Agreement An affiliate agreement is a legal contract between a merchant and an affiliate that defines the terms and conditions of their partnership,…](/glossary/affiliate-agreement/) [Gift Card Reward A gift card reward is a referral or loyalty incentive paid as a digital gift card instead of cash, account credit, or a discount. The…](/glossary/gift-card-reward/) [Commission Rate A commission rate is the percentage or fixed amount an affiliate earns for each qualifying conversion they drive, serving as the primary…](/glossary/commission-rate/) ## How GrowSurf Helps GrowSurf's Tax Center handles the paperwork for US companies that pay referral or affiliate participants. Turn on Tax Forms, add your payer's legal name and EIN, and GrowSurf collects Form W-9 from US recipients and Form W-8 from international ones on a secure hosted page inside the participant portal, on web or mobile. The reward or payout that reaches the threshold is paused until the form is complete, and GrowSurf never stores a full Social Security number. GrowSurf classifies each payment by why the person was paid, so affiliate commissions become Form 1099-NEC candidates and customer referral prizes become Form 1099-MISC candidates. Same-form amounts combine across programs under one payer EIN while NEC and MISC thresholds stay separate. At year-end you review every recipient and amount, authorize e-filing, and track IRS acceptance from the Filing tab. Recipients get online access to their forms. You remain the payer of record, and GrowSurf does not provide tax advice. ## Related Blog Posts ### [Top 5 Affiliate Software Tools in 2026 for Marketers](/blog/affiliate-software-tools/) Affiliate software tools make all the difference to a sophisticated, efficient and profitable affiliate marketing program. We explore the top five in this article. ### [Referral Program Costs & Referral Program ROI Explained](/blog/referral-program-costs/) Are you a B2B or B2C company? Learn how to calculate your referral program costs and compare those numbers against the expected ROI from referred customers. ### [30 Affiliate Marketing Statistics You Should Know in 2026](/blog/affiliate-marketing-statistics/) Affiliate marketing is a rising trend and is sure to grow in 2026. Here are 30 powerful affiliate marketing statistics to keep in mind for future campaigns. ## FAQ #### Do I need to send a 1099-NEC to affiliates? In the US, yes, once an affiliate's commissions for the year reach the threshold ($600 for payments made in 2025, $2,000 for 2026 and later). Commissions are payment for services, which is exactly what Form 1099-NEC reports. Confirm with a tax professional. #### What is the difference between 1099-NEC and 1099-MISC? 1099-NEC reports payments for services, such as affiliate commissions. 1099-MISC reports prizes, awards, and other income, such as gift cards given to customers for referring a friend. The thresholds are tracked separately. #### Do gift card rewards count toward the threshold? Yes. A gift card is income at its face value. For affiliates it counts toward 1099-NEC; for referring customers it usually counts toward 1099-MISC. #### What about affiliates outside the US? Collect Form W-8BEN (individuals) or W-8BEN-E (businesses) instead of a W-9. Foreign recipients generally do not receive a 1099, but you need the W-8 on file to document that. ## Unlock the power of word-of-mouth marketing and deepen your bond with customers Set up your refer a friend program with customer referral and affiliate program software that lowers your acquisition costs, increases customer loyalty, and saves you gobs of time. [Launch Your Program](https://app.growsurf.com/signup) 14 day free trial No credit card required Trusted by marketing and product teams that grow through customer, user, and partner referrals. ## Built for lean teams, scaled for category leaders Successfully submitted! Error! Please try again