What Farmers Should Know About 1099 Reporting in 2026
If you run a farm or ag business, tax paperwork is nothing new. But every year we still see producers run into the same surprise when January rolls around: 1099 reporting requirements.
Whether you hire custom operators, truckers, agronomists, or independent contractors, there’s a good chance some of those payments require a Form 1099-NEC.
And if those forms aren’t issued correctly, the IRS can apply penalties that add up quickly.
When Farmers Must Issue a 1099
Most farm operations must issue a 1099-NEC when they pay $600 or more to a non-employee for services during the year.
Common examples in agriculture include:
Custom combining or spraying
Independent truck drivers hauling grain or livestock
Agronomy or consulting services
Equipment repair by independent contractors
These payments must be reported if the provider is operating as an individual, partnership, or LLC taxed as a partnership.
When You Typically Don’t Need One
There are a few situations where a 1099 usually isn’t required.
You generally do not issue a 1099 if:
The vendor is taxed as an S-Corporation or C-Corporation
The payment was made by credit card or payment processor
The expense was for products rather than services
However, the safest approach is to collect a Form W-9 before paying any new vendor so you know their tax classification.
Why the W-9 Matters
The W-9 tells you:
The vendor’s legal name
Their business entity type
Their taxpayer identification number
Without this information, preparing 1099s in January becomes much harder and sometimes impossible.
Many farmers don’t think about this until the end of the year, when trying to track down contractors who finished work months earlier.
Penalties Are Increasing
The IRS continues to increase penalties for missing or incorrect 1099 forms.
Penalties can range from $60 to $310 per form, depending on how late the correction is made. For farms working with multiple custom operators or service providers, that can add up quickly.
A Simple Habit That Saves Time
The easiest way to avoid 1099 headaches is simple:
Request a W-9 before the first payment is made.
Keeping those forms on file throughout the year makes January reporting much easier and prevents last-minute scrambling.
Planning Ahead
Agriculture businesses often work with a wide range of contractors throughout the season. Taking a few minutes to organize vendor information now can save significant time and stress at tax time.
If you have questions about 1099 requirements, farm tax planning, or ag business structures, working with an accountant who understands agriculture can make a big difference.
Steinke & Company
