2026 change in the1099-NEC threshold (and a commentary on AI)

As an aside, I just had an "interesting" interaction with AI. I make it a point to not seek using it outside of what is embedded as part of tax and accounting related software I use and pay for (so it is a "closed system"). Every so often, I test how it's working in the accounting and tax space (where I have the expertise to judge it properly)

In preparation for this blog, I wanted to have AI confirm what I was 80% certain about, in that the new 1099-NEC reporting threshold is $2,000 beginning with the 2026 year. When I presented it with the initial confirmation question, AI claimed that I was incorrect, that the new $2,000 threshold was only for 1099-MISC. This began an argument of sorts between us, and I ended up having to show it the actual IRS source. At that point the AI did an abrupt turnaround and agreed with me.

Curious, I then proceeded having a "conversation" with the AI about how something so simple could go so wrong for it. I explained that users with no knowledge on a topic cannot be led astray like this, and that it should not act certain about its correctness when it is not correct. A couple of key takeaways:

• I actually enjoy the way AI can admit it is wrong with no "shame", which is a very different experience than I have had to have with many humans. Conversing with a "logical" being is actually a pleasant experience (haha).

• Proceed with caution using AI if you are not an expert in the subject matter. AI admits that it should never replace professional judgment and also admits that its creators are not transparent about this in its marketing. I had to explain to it that professional judgment was not really needed on the topic I was asking it about, and it admitted that this was true. How refreshing.

Anyway, back to the subject matter. It is important to note that just because someone doesn't receive a 1099 from a client because they did not earn more than $2,000 from them in the year, this DOES NOT MEAN, you don't have to report the income. True, the IRS may not know about this income unless they audit, but you technically are required to report all income regardless of it not being supported by a 1099.