Some businesses file 1099s in an afternoon. Others spend a week scrambling through bank statements, hunting down missing W-9s, and piecing together who got paid what. The difference comes down to preparation: collecting contractor paperwork upfront and tracking payments throughout the year, rather than reconstructing everything in January.
The right 1099 software supports year-round organization, not just end-of-year filing. This guide compares the leading 1099 platforms and helps you find the right fit for your business.
What's Changing in 2026 and Why It Matters Now
For the 2025 tax year, you must file a 1099-NEC for any contractor paid $600 or more. Starting in 2026, that threshold increases to $2,000.
Here's what that means in practice: if you pay 20 contractors $800 each, you'll file 20 forms for 2025. For those same payments in 2026, you'd file zero. Many businesses will see their filing volume drop significantly.
This threshold change affects which software makes financial sense. Pay-per-form services become less valuable when you're filing fewer forms. Platforms with year-round contractor tracking and payment processing stay useful even when your actual filing count drops.
Banking platforms like Relay handle the documentation side, collecting W-9s at vendor setup and organizing payment records throughout the year, while dedicated 1099 software like Tax1099 or Track1099 handles the actual filing when January arrives.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
Bottom line: Choose software based on your ongoing contractor management needs, not just your current filing volume. With that context in mind, let's look at what each platform actually offers and which one fits your situation.
Detailed Platform Comparison
Choosing 1099 software based on price alone misses the frustrations hiding in the details: clunky data imports that require manual cleanup, integrations that break mid-filing, or missing features you assumed were included. This breakdown explains what each platform does well, where it falls short, and which compliance risks it specifically addresses.
Tax1099: Best for Simple Annual Filing
Paying for software you only use once a year feels wasteful, especially when your contractor relationships are straightforward and you just need to generate the forms and file them. Tax1099 solves this by charging only when you actually file, with no subscription fees eating into your budget during the months you're not thinking about 1099s.
Volume | Cost per Form |
Low (1-20 forms) | $2.99 |
Mid (21-150 forms) | $2.30 |
High (501+ forms) | $0.68 |
Tax1099 maintains a 4.4/5 star rating on Trustpilot, with users praising ease of use, filing notifications, and year-to-year data retention. That last feature matters more than it sounds: when contractor information carries over from previous years, you're not re-entering the same W-9 data every January.
The platform imports data from QuickBooks through manual import workflows, which means you review everything before submission rather than trusting an automatic sync. If you want control over exactly what gets filed, this verification step prevents the errors that automated systems sometimes introduce.
Helps prevent: Missing or incorrect TINs through year-to-year data retention; wrong form types through guided form selection.
Track1099 (Avalara): Best for High Volume
Your contractor list keeps growing, but per-form pricing means your 1099 costs grow even faster. Filing 500 forms at $2.99 each means spending nearly $1,500 on a compliance task that should be routine. High-volume filers need pricing that scales with their business, not per-form rates designed for companies with a handful of contractors.
Track1099, now part of Avalara, targets this problem with volume-based pricing: $3.10 per form for low volumes drops to $0.63 per form when you're filing 501 or more returns.
Volume | Cost per Form |
Low (1-15 forms) | $3.10 |
Mid (16-165 forms) | $2.30 |
High (501+ forms) | $0.63 |
Track1099's API supports automated data transfer for businesses with developer resources, making it a stronger choice for companies integrating 1099 filing into existing workflows. The platform also offers TIN matching to verify contractor information before filing, reducing the rejection rates that trigger resubmission headaches.
Helps prevent: Incorrect TINs through built-in TIN matching; filing errors through automated data validation.
QuickBooks Online: Best for Existing QuickBooks Users
Switching between your accounting software and a separate 1099 platform creates opportunities for errors, especially when contractor names don't match exactly or payment totals need reconciliation. If you're already tracking contractor payments in QuickBooks Online, the native 1099 functionality keeps everything in one system.
QuickBooks Online charges a base fee of $15 plus $7.50 per month for up to 20 contractors, including unlimited 1099-NEC and 1099-MISC e-filing. The built-in tools automatically identify contractors meeting the filing threshold, track payments throughout the year, and exclude credit card payments as required by IRS rules.
The real value comes from elimination of data transfer. Contractor information, payment history, and tax classifications already live in QuickBooks. The 1099 module pulls directly from that data, which means no CSV exports, no manual verification of totals, and no wondering whether the numbers in your filing platform match the numbers in your books.
Account mapping lets you specify which expense categories contain contractor payments, so the system knows to include payments coded to "Professional Services" while excluding payments coded to "Office Supplies" that happen to go to vendors.
Helps prevent: Wrong form types through automatic 1099-NEC vs. 1099-MISC selection; payment total errors through direct integration with your books.
Gusto: Best for Ongoing Contractor Management
Managing contractors means more than just filing forms in January. Collecting W-9s, setting up payment methods, tracking hours or deliverables, and maintaining current contact information creates ongoing administrative work that most 1099 software ignores completely.
Gusto at $35 per month plus $6 per contractor addresses the full contractor lifecycle. New contractors receive onboarding emails to complete their W-9 and set up direct deposit, eliminating the back-and-forth of collecting information manually. The contractor portal gives them access to payment history and tax documents without requiring your involvement.
The platform handles federal and state filing, which matters in states with their own 1099 reporting requirements. Electronic delivery through the contractor portal means you're not printing and mailing forms in January, and contractors can access their documents immediately rather than waiting for postal delivery.
Gusto's QuickBooks connection creates automatic journal entries for contractor payments, though users report occasional sync issues with project-based tracking. If you're using job costing heavily, verify that contractor payments categorize correctly after the integration is running.
Helps prevent: Missing W-9s through automated collection at onboarding; worker misclassification through built-in classification guidance.
Square Payroll: Best for Frequent Payments
Paying contractors irregularly throughout the year creates tracking headaches that compound at tax time. Each payment needs documentation, the running total needs to stay accurate across months of transactions, and by December you're trying to reconstruct a year's worth of payments from bank statements and email threads.
Square Payroll charges $6 per contractor per month with no base fee, which changes the math for businesses with ongoing contractor relationships. Ten contractors cost $720 annually, including unlimited payroll runs, direct deposit, and digital 1099-NEC delivery.
The platform handles payment tracking automatically. Each contractor payment creates a record with date, amount, and payment method. When January arrives, the 1099 data is already compiled rather than requiring end-of-year reconstruction. Square Payroll integrates with the broader Square ecosystem, which makes it particularly effective if you're already using Square for payments.
Helps prevent: Payment total errors through automatic tracking; missing documentation through centralized payment records.
The January 31 Deadline and Penalty Escalation
Filing late means writing checks to the IRS instead of investing in your business. Form 1099-NEC carries one of the strictest deadlines in business tax compliance: January 31 applies to both IRS filing and contractor distribution, with no extension available.
Penalties escalate based on how late you file: $60 per form if you're within 30 days, $130 per form from 31 days through August 1, and $340 per form after that. With 20 contractors, filing two months late means $2,600 in penalties for what should have been a routine compliance task.
Electronic Filing Requirements
Figuring out whether you need to file electronically or can submit paper forms adds one more question to an already complicated process. The IRS requires electronic filing when submitting 10 or more information returns of any type combined, including W-2s, 1099-NEC forms, 1099-MISC forms, and other returns. Every platform covered in this guide handles e-filing, so you won't need to worry about paper forms or FIRE system registration.
Making the Right Choice
The software comparison matters less than the habit it enables. What separates businesses that breeze through January from those scrambling against the deadline is whether contractor documentation stays organized throughout the year.
Filing 1099s becomes routine when you collect W-9s during contractor onboarding and keep payment records organized by vendor. Choose a platform that matches your contractor volume and how often you pay them. But here's what really matters: staying on top of documentation year-round. That's what turns January 31 from a stressful deadline into a simple checkbox.
Separating contractor payments through dedicated accounts1 creates the clean transaction records that make this possible. Relay's multi-account system lets you create purpose-built accounts for contractor payments, with direct QuickBooks Online or Xero sync to keep records organized.
Sign up for Relay to turn 1099 compliance into a routine export rather than an annual scramble.
1Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
