Important 1099 & W-2 tips for Feb. 2 deadline

The start of 2026 finds me as 2025 left me…waiting. 

On hold, in traffic, camped out in waiting rooms. So naturally, I’m using this time to write about 1099 and W-2 updates. Because there’s nothing that passes the time better than researching changes to tax law, right?

At the start of December, I wrote about the coming January goal ruiner of 1099 and W-2 deadlines. In the blessed words of my gynecologist, Father Time remains undefeated. (TBH, I might have preferred to stay in the waiting room.) 

If you’ve been following along, organizing your 1099s and W-2s was on your end-of-year checklist. With the February 2, 2026 filing deadline now imminent, I’m going to highlight some important changes. 

If you’re an employer or you pay contractors, some 2025 changes to note:

• The IRS has gone paperless, folks. I hope you weren’t filing paper W-2s and sending checks, but if you were, buckle up because the IRS is fully digital. No payments by check, no paper reporting, no mailing in your tax filings. DOGE was a monumental waste, but I will give them the teeniest shred of credit for ending our use of checks. 

• For 1099s, your decision tree of who gets what just got messier. For example, the “paid through PayPal/Venmo/CashApp” reporting rules have been changing every year, at the last minute, for three years straight. And it’s happened again.

• And W-2 rules got a big ol’ mid-year shake-up. Tips in certain categories are treated differently, as well as overtime. Along with a few other changes, you’re likely going to have to do some data validation before you release these to your employees. 

So what does this mean for you? If you’ve done this before, the tips below should accomplish this year’s changes. If this is your first year issuing 1099s or W-2s, my blog has the extended disco version of everything you need to know to get your paperwork in order. 

1099s: Same decision tree, more forms, usual PayPal chaos

The answer to “Who needs a 1099?” is still a decision tree: how much did you pay + how you paid + how the vendor is taxed. 

The “how much” is $600. Any vendor or freelancer you paid at least $600 needs to be evaluated. 

The “how you paid” means from your bank account. If $600 combined left your bank account to pay a vendor or freelancer via cash, check, ACH, or Zelle, you’re still on the hook. (If you paid by credit card, PayPal, Venmo, or Cash App, you’re off the hook. Processors file their own 1099 payment reports.)

The last step is how the vendor is taxed. When you start paying someone, you should ask for a W-9, which tells you whether they’re a sole proprietor, partnership, or LLC taxed as one of those. If they are, and you paid them more than $600 from your bank account, you owe them a 1099-NEC or 1099-MISC.  

If you’ve been collecting W-9s as you go, this should be straightforward. If not, organize your vendor list and start requesting W-9s. While you’re at is, ask which email address you should use to send their tax information.

For filing, Tax1099 and Avalara 1099 are two easy, inexpensive options. If you use bookkeeping software like Quickbooks or Xero, check their integrated 1099 options. 

On the flip side, if you got paid via PayPal, Venmo, or CashApp last year, you might benefit from the ever-moving minimum threshold. While we started 2025 with a reportable minimum of $600, it jumped back up to $20,000 when the OBBBA became law. While it’s your responsibility to report any earned income, your friends at PayPal, Venmo, and CashApp will not be sending you a 2025 1099-K unless you cracked $20,000 and 200 or more transactions. 

Clear as mud? Need more info on 1099 types? Head to this blog post.

If you’ve been an employee, you’ve received a W-2, or the tiny form with many tiny boxes that you staple to your tax return. They’re still that, but they have a couple of extra tiny boxes, and you’ll need a digital copy. 

If you use a payroll system, it’s been counting up your wages and payroll tax deductions all year. Yippee, right? But before you hit send, you might need to check a few more of those little boxes. 

Did you provide health benefits? Have a retirement plan? Give bonuses? Pay tips or overtime? All that information needs to be gathered and summarized on the W-2. 

And it gets better, because the rules changed mid-year. While July’s OBBBA law changed the tax treatment for some overtime and some tipped wages, the IRS didn’t clarify how that would work until it was way too late for payroll systems to revise tracking categories for 2025. 

Unfortunately, it lands on you to fill in all the little boxes correctly, or your employees can’t claim the tax breaks. You’ll need to review your compensation data and amend your W-2s, if needed.

Yes, this is totally why you started your company -- who doesn’t live to manually enter arbitrary data into teeny, strangely-numbered boxes? 

One more change: while your employees may request to receive their W-2s as digital, paper, or both, your IRS summary report must be filed electronically. The IRS is recommending you file by January 25, but the official deadline is February 2. (Also the date you’ll need to distribute forms to your employees.) 

Need more help? I’ve added a new “All About W-2s” article to the blog:

Okay. That’s the Cliff’s Notes, everybody, but do your homework. Don’t guess with this stuff. Remember that the 1099s and W-2s you file today become the qualified business expenses you claim in April. Review the resources above, triple-check your data, and get everything filed on time.

• January 15: 

  • Q4 estimated taxes due

  • Last day for extended healthcare.gov open enrollment for February 1 in most states (NOTE: no, this vote didn’t reinstate extended subsidies)

• January 19: Martin Luther King, Jr. federal holiday

• February 2: Filing deadline for 1099s and W-2s

• February 16: Presidents Day federal holiday

Cloudflare vs. Google’s AI requests: “search can pass, AI can’t.” Does it seem like Google AI summaries have gotten better lately? Last week, the CEO of security company Cloudflare told us why. In mid-November, Google updated its terms to allow a companion AI request to go with every search query. This gave Google a much bigger “visible universe” of data than Meta or OpenAI, and our thirsty little SEO tags are now helping to train Gemini. Cloudflare is denying the AI requests while letting the search requests through, but lots of sites aren’t blocking the AI ping. A small change to the user agreement will quickly give Google a massive advantage, which might matter to you as you decide what AI subscriptions to renew.

How a chicken farmer built a $9 egg brand people love. This is the story of a chicken farmer with a problem -- he can’t make a living as a chicken farmer. How did he go from unprofitable agricultural commodity to Vital Eggs, which are everywhere and $9 a dozen? It’s a slow build of brand, organization, community, cribbing from others, and finding a customer who loves the story. A great read if you’re in a low-margin industry where everybody else is accepting how it is.

A new study says “I’ll sleep when I’m dead” will get you there faster. If you’re rising and grinding day after day, you are literally shaving years off your life. A new, large-scale study directly connects sustained lack of sleep to earlier death. (The authors are much nicer, they say “shorter lifespan.”) Put down the phone, grab a nap, and go to bed 15 minutes earlier.