New Form Boxes, 1099-K Reversal, FIRE System Sunset
If you file 1099-NEC or 1099-MISC forms, use the IRS FIRE system, or advise clients who receive payments through apps like PayPal or Venmo, now is the time to get up to speed.
For 2026 returns, Forms 1099-NEC and 1099-MISC have been updated to allow reporting of cash tips, Treasury Tipped Occupation Codes, and overtime compensation.
On Form 1099-NEC, nonemployee compensation is now shown in Box 1a instead of the traditional Box 1. The form also includes:
One important clarification: the amounts reported in Boxes 1b and 1d are already included in Box 1a. They are informational sub-totals, not additive amounts.
The form also adds a new Box 3 for excess golden parachute payments, which is being moved here from the 1099-MISC.²
Form 1099-MISC now includes similar reporting fields, but in different boxes:
The IRS instructions state that cash tips in Box 13a and overtime compensation in Box 14 are already included in the amount reported in Box 3.
Keep in mind: These are still draft forms. The IRS will release final versions after OMB approval, likely later in 2026.
These updates are tied to new deductions for qualified tips and overtime compensation. The new boxes help recipients identify amounts that may be relevant when determining those deductions.
For accountants and businesses, this means reporting systems may need to separately track:
Even though the total amount may still roll into a main compensation box, the supporting detail now matters.
One of the biggest pieces of good news for many small businesses and platform users is the rollback of the lower Form 1099-K threshold.
For third-party settlement organizations, the federal Form 1099-K reporting threshold is back to the older standard: reporting is generally required only when both of the following are met:
IRS Publication 1099 confirms that third-party settlement organizations must report third-party network transactions only if both thresholds are met. This affects payment platforms like PayPal, Venmo, and Cash App, who will only be required to issue a Form 1099-K when a payee exceeds both thresholds simultaneously.
This change reduces the number of people who may receive Forms 1099-K for smaller payment activity. However, it is important to remember that a reporting threshold is not the same as a taxability threshold.
Income may still be taxable even if no Form 1099-K is issued. The threshold change does not change anyone's obligation to report income. A freelancer who earns $10,000 through PayPal still owes tax on that income.
State thresholds may differ. Several states, including Massachusetts, Vermont, Maryland, Virginia, and others — have their own 1099-K reporting rules that can be lower than the federal threshold.
The IRS is also moving away from the long-standing FIRE system. It is being permanently retired on December 31, 2026.
Beginning with tax year 2026 / filing season 2027, the Information Returns Intake System, or IRIS, will be the only intake system for information returns. The IRS also states that FIRE will not be available for current-year submissions, prior-year submissions, or corrections once the system shuts down in 2026 for year-end.
Missing these deadlines results in IRS penalties starting at $60 per form, scaling up to $310 per form, with no penalty cap for intentional disregard. The IRS has stated that FIRE being unavailable is not considered reasonable cause for a late filing
This is one of the most commonly misunderstood aspects of the transition. FIRE Transmitter Control Codes and IRIS TCCs are separate and not interchangeable. If you currently file through FIRE using your own TCC, you must apply for a new IRIS-specific TCC, and that process can take 45 or more days.
To get started, visit IRS.gov/IRIS and submit your application for an IRIS TCC.
If you use an IRS-authorized e-file provider (like eFileBuddy), you file under the provider's TCC and do not need your own. One less thing to worry about!
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For tax professionals, the key is not just knowing the changes. It is helping clients understand what the changes do.
A higher reporting threshold does not erase taxable income. A new form box does not eliminate the need for accurate records. And the IRIS transition is not something to leave until January.
1099 filing should be simple. eFileBuddy helps you stay compliant and file accurately—whether you’re handling one form or hundreds.