The $600 1099 Rule Changed for 2026—But Don’t Abandon Your W-9 Process
STRESS FREE CPA SOLUTIONS
HARSH KUMAR, Certified Public Accountant
www.stressfreecpasolutions.com
If you sell trading cards online, operate a booth at conventions, break cards, or own a hobby shop, an important federal information-reporting rule has changed for 2026.
For many business payments reported on Forms 1099-NEC and 1099-MISC, the federal reporting threshold increased from $600 to $2,000.
That may reduce the number of 1099 forms some small businesses need to prepare. However, it does not eliminate the need to collect Form W-9, maintain accurate vendor records, distinguish contractors from employees, or properly record business income and expenses.
Here is what TCG sellers and hobby-shop owners should know.
What Changed for 2026?
For payments made after December 31, 2025, the federal reporting threshold for certain payments increased from $600 to $2,000.
In practical terms:
2025 and earlier: Many qualifying business payments of $600 or more triggered a Form 1099-NEC or Form 1099-MISC filing requirement.
2026: The threshold for many of those payments is generally $2,000.
For example, assume your business pays an independent contractor $1,500 during 2026 to help organize inventory and process customer orders at card shows.
Based solely on the payment amount, your business generally would not be required to issue that contractor a federal Form 1099-NEC for 2026.
However, this does not mean that every 1099 threshold is now $2,000. Different payment categories can have separate thresholds and special rules. The IRS’s [2026 General Instructions for Certain Information Returns](https://www.irs.gov/publications/p1099) should be consulted when determining the correct reporting treatment.
What Is Form 1099-NEC?
A business generally uses Form 1099-NEC to report qualifying payments made to someone who is not an employee for services performed in the course of the business.
For a TCG seller or hobby shop, potential examples may include payments to:
* A contractor who helps at card shows or conventions
* A photographer who takes product pictures
* A website designer or developer
* A social-media manager
* A freelance video editor
* An independent inventory or bookkeeping assistant
* A contractor who sorts, grades, lists, or ships cards
Whether a worker is an employee or an independent contractor depends on the underlying working relationship—not simply the amount paid or whether a 1099 is issued.
The new $2,000 threshold does not convert an employee into an independent contractor. Worker classification should be evaluated separately.
The IRS provides additional information through its guidance on [reporting payments to independent contractors](https://www.irs.gov/businesses/small-businesses-self-employed/reporting-payments-to-independent-contractors).
Why Should You Still Collect Form W-9?
The higher filing threshold does not eliminate the need for a reliable vendor-onboarding process.
Form W-9 provides information that helps your business determine whether a payment may need to be reported, including the recipient’s:
* Legal name
* Business name, when applicable
* Federal tax classification
* Taxpayer identification number
* Address
* Certification regarding backup withholding
Without a completed W-9, you may not know whether you paid an individual, partnership, LLC, or corporation. You may also discover in January that the name recorded in your accounting system does not match the taxpayer identification number provided by the vendor.
The best practice is to collect Form W-9 before making the first payment—not after the vendor reaches the reporting threshold.
If a vendor eventually receives less than $2,000, the completed W-9 still supports your bookkeeping records and helps document who received the payment.
Example for a Small TCG Vendor
Imagine that you operate a booth at several card conventions during 2026.
You make the following payments:
$1,500 to a card-show helper
$2,400 to a freelance photographer
$900 to a website designer
$8,000 to an individual collector for a card collection purchased as inventory
These payments should not automatically be treated the same way.
The payments to the helper, photographer, and website designer relate to services. Each service provider should generally complete Form W-9, and the business should track the total amount paid during the year.
The card collection purchase is an inventory transaction rather than payment for contractor services. It should be recorded separately from outside labor or professional fees. Inventory purchases generally do not become nonemployee compensation merely because the seller is an individual.
Special circumstances and other information-reporting rules may still apply, so the nature of each payment should be reviewed instead of relying solely on the vendor’s name or total dollars paid.
Form 1099-NEC and Form 1099-K Are Different
TCG businesses frequently confuse Forms 1099-NEC and 1099-K, but they report different types of transactions.
Form 1099-NEC: Money Your Business Pays
Your business may be responsible for issuing Form 1099-NEC when it pays a qualifying independent contractor for services.
Examples include paying for convention help, photography, marketing, website support, or inventory-listing services.
Form 1099-K: Money Your Business Receives
A marketplace or payment processor may issue Form 1099-K to report payments your business receives for goods or services.
For third-party settlement organizations, the federal reporting threshold generally requires both:
More than $20,000 in total payments; and
More than 200 transactions during the calendar year.
This threshold applies specifically to third-party network transactions. Payment-card transactions and certain other arrangements can be subject to different reporting rules. States may also establish lower information-reporting thresholds.
The IRS explains these requirements in its [Form 1099-K guidance for third-party filers](https://www.irs.gov/newsroom/form-1099-k-faqs-third-party-filers-of-form-1099-k).
No Form 1099-K Does Not Mean the Income Is Tax-Free
The 1099-K threshold is an information-reporting threshold. It is not the threshold for determining whether business income is taxable.
A TCG seller may have taxable business income even if:
No marketplace issues a Form 1099-K
Sales fall below the federal 1099-K threshold
Payments are received in cash
Customers pay through multiple marketplaces
Sales proceeds are deposited into a personal account
Businesses should maintain their own sales records rather than using Forms 1099-K as the sole source for reporting revenue.
Marketplace statements can also report gross payments before deducting fees, refunds, shipping charges, or other expenses. Those items must be reconciled separately to avoid understating income or overlooking allowable business expenses.
What TCG Businesses Should Do Before Year-End
The higher threshold may reduce filing volume, but year-round recordkeeping remains essential.
TCG sellers and hobby-shop owners should:
1. Collect Form W-9 before paying a new contractor.
Do not wait until January to request information.
2. Track each service provider separately.
Record the vendor’s name, payment amount, payment method, and nature of the service.
3. Separate services from inventory purchases.
Payments for card collections, sealed products, supplies, booth assistance, marketing, and professional services should not all be recorded in the same expense account.
4. Save marketplace settlement reports.
Retain reports showing gross sales, fees, refunds, chargebacks, shipping adjustments, and net deposits.
5. Reconcile marketplace deposits to your books.
A net bank deposit is not necessarily the correct amount of revenue to record.
6. Review vendor totals before year-end.
Identify missing W-9s and potential reporting obligations before filing season begins.
7. Confirm who will prepare and file the forms.
Determine whether filing will be handled by your accountant, payroll provider, bookkeeping service, payment platform, or the business itself.
How the Change Can Benefit Small TCG Businesses
The increased threshold may benefit small businesses by reducing the number of Forms 1099-NEC and 1099-MISC they are required to prepare for lower-dollar vendors.
That can mean:
Fewer information returns to prepare
Lower filing and processing costs
Less January administrative work
Fewer corrections caused by incomplete vendor information
More time to focus on higher-risk or higher-dollar payments
However, those benefits depend on maintaining organized records throughout the year. A higher threshold should simplify the filing process—not become a reason to stop tracking vendors.
Stress-Free 1099 Preparation Starts Before January
TCG businesses have accounting challenges that ordinary retail businesses may not face. Inventory may be purchased from distributors, individual collectors, trade-ins, conventions, and online marketplaces. Sales may occur through a storefront, card shows, TCGPlayer, eBay, Whatnot, social media, or direct customer payments.
Those transactions need to be classified and reconciled correctly before tax-return preparation begins.
Stress Free CPA Solutions provides bookkeeping, tax preparation, cleanup, and year-round accounting support for TCG sellers, collectibles businesses, and hobby shops.
We can help you:
Review your contractor and vendor records
Identify missing Forms W-9
Separate inventory purchases from contractor expenses
Reconcile marketplace sales and payouts
Evaluate potential 1099 filing requirements
Prepare your bookkeeping records for tax season
Sell cards. Run your shop. Let us help with the accounting.
Contact Stress Free CPA Solutions to discuss accounting and tax support for your TCG business For more information, please reach out to Harsh Kumar CPA at harsh@stressfreecpasolutions.com or 347-441-0412.
This article provides general information and does not constitute individualized tax or legal advice. Federal exceptions, special payment rules, worker-classification considerations, and state reporting requirements may apply.
