For commissions paid during 2026, a US business files Form 1099-NEC for an affiliate only once it has paid that affiliate $2,000 or more in the year. The old figure was $600. The IRS's 1099-NEC instructions (revised 12/2026, for 2026 returns filed in early 2027) say the minimum "increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027". Before that matters, you still need the right form on file: a W-9 from US affiliates, a W-8BEN from foreign individuals and a W-8BEN-E from foreign companies.
Plenty of vendor blogs that rank for "affiliate 1099" still quote $600. That was correct for 2025 payments and earlier. It's wrong for anything you pay from 1 January 2026.
This page is general information about how US information reporting works for affiliate and partner payouts. It isn't tax or legal advice. The rules have exceptions we don't cover, and your facts decide which apply, so check the IRS pages linked here and talk to a tax professional before you change how you file.
Which form for which affiliate
Start by sorting your payees. The form you collect depends on whether the affiliate is a US person and whether they're an individual or an entity.
| Affiliate | Form you collect | Filed with the IRS? | What you may file at year end |
|---|---|---|---|
| US individual, sole proprietor or single-member LLC | W-9 | No, you keep it | Form 1099-NEC if you paid $2,000 or more in 2026 |
| US partnership or multi-member LLC | W-9 | No | Usually 1099-NEC at $2,000 or more |
| US C or S corporation (including an LLC taxed as one) | W-9 | No | Generally nothing: the 1099-NEC instructions list payments to corporations as an exception |
| Foreign individual | W-8BEN | No, you keep it | Usually nothing if the work was done outside the US (see below); Form 1042-S if you paid US-source income |
| Foreign company | W-8BEN-E | No | Same as above |
None of the W forms get sent to the IRS. The IRS page for the W-8BEN says to give it "to the withholding agent or payer", which is you. You keep it on file as evidence of why you did or didn't report and withhold.
The 2026 threshold change, with numbers
The 2025 tax law (Public Law 119-21, usually called the One Big Beautiful Bill Act) raised the minimum for 1099-NEC and most 1099-MISC boxes from $600 to $2,000, starting with payments made in 2026. The IRS instructions apply the same $2,000 figure to backup withholding on those payments, and say it may be indexed for inflation from 2027.
Here's what that means for a program paying monthly commissions:
| Affiliate's total 2026 payouts | 1099-NEC required? |
|---|---|
| $650 (would have needed one under the old rule) | No |
| $1,950 | No |
| $2,000 | Yes |
| $14,400 ($1,200 a month × 12) | Yes |
The threshold counts what you paid in the calendar year, not what the affiliate earned. A commission earned in December 2026 and paid in January 2027 falls into 2027. Most programs pay monthly (45 of the 56 programs in our directory that state a payout frequency), and many pay net 30 after the month closes, so your December commissions usually land in the next tax year.
Two things haven't changed. You can still file a 1099-NEC below $2,000 if you want to; nothing stops you. And if you withheld any federal income tax under backup withholding, the instructions say you file a 1099-NEC "regardless of the amount of the payment".
Three more dates and rules from the IRS instructions that trip up first-time filers:
- The 1099-NEC is due to the IRS and to the affiliate by 31 January. For 2026 payments that's 31 January 2027, a Sunday, so the deadline moves to Monday 1 February 2027 under the next-business-day rule.
- If you file 10 or more information returns of any type in the year, you have to e-file them. The 10 counts across form types, per the General Instructions for Certain Information Returns.
- The IRS e-filing system for these forms is IRIS, and the 1042-S for 2026 also has to go through it.
PayPal, cards and the 1099-K
This is the part most affiliate guides skip, and it changes who files.
The 1099-NEC instructions say payments "made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity" and are not reported on the 1099-NEC or 1099-MISC. So if a payment platform counts as the settlement entity for your payout, the platform reports it, not you.
The 1099-K has its own threshold, and it moved too. The Instructions for Form 1099-K (revised 12/2026) say a third-party settlement organization reports a payee's network transactions only when the total exceeds $20,000 and the number of transactions exceeds 200 in the calendar year. The IRS adds that a platform may send a 1099-K for lower amounts anyway.
What this means in practice:
- A direct bank transfer or ACH to an affiliate isn't a card or third-party network transaction. It stays on your 1099-NEC at $2,000.
- If you pay through a platform that acts as the settlement organization, that platform handles the 1099-K, and the payee often won't get one unless they cross $20,000 and 200 transactions across all their income on that platform.
- Whether a specific payout product (a mass-payout API, a wallet transfer, a managed payout service) is a third-party network transaction for your situation is a factual question. Ask your accountant and read the provider's own tax documentation. We'd rather you check than assume.
An affiliate who isn't sent a form still owes tax on the income. The forms are about reporting, not about whether the money is taxable.
W-8BEN, withholding and treaties
Most SaaS programs pay a lot of affiliates outside the US. For them, the question is whether the commission is US-source income.
Publication 515 (2026) is direct about personal services: "The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer." A blogger in Lisbon who writes a review and sends you customers is generally performing those services in Portugal. That's foreign-source income, which generally isn't subject to US withholding under chapter 3.
Where income is US-source, Pub 515 says most types paid to a foreign person are taxed at 30%, and a tax treaty can cut that, sometimes to zero. The W-8BEN is where the affiliate certifies they're foreign and, if relevant, claims a treaty rate.
So why collect a W-8BEN from someone you probably won't withhold on? Because it's your documentation. If a payee has no W-9 and no W-8 on file, the IRS presumption rules in Pub 515 decide how you treat them, and those can push you towards withholding. A signed W-8BEN says, in the affiliate's own words and under penalty of perjury, that they're not a US person.
A couple of edge cases worth flagging to your accountant:
- A foreign affiliate who does the work while physically in the US (a conference trip where they run a paid workshop for you, say) may have US-source income for that part.
- A W-8BEN that lists a US address, a US phone number or US bank details can conflict with the claim of foreign status. Pub 515 covers when you can still rely on it.
Form 1042-S basics
Form 1042-S reports US-source income paid to foreign persons that's subject to withholding, and it's filed even when a treaty brings the withholding to zero. The 1099-NEC instructions point the same way: use Form 1042-S "for payments to nonresident aliens".
For 2026 forms, Pub 515 gives the due date as 15 March 2027 and says IRIS must be used to e-file them.
For a typical online affiliate program, where foreign affiliates do all their work abroad, you may file no 1042-S at all. If you pay foreign partners for work in the US, or pay them royalties for content licences, you probably will. That distinction is worth settling with your tax adviser once, before your first payout run, and then writing into your onboarding.
When to collect the forms
Collect them before the first payout, not at year end. Chasing 300 affiliates for W-9s in January is miserable, and anyone who doesn't reply blocks your 1099 filing.
What we'd put in the payout flow:
- Ask every new affiliate whether they're a US person when they apply, and route them to a W-9 or a W-8BEN / W-8BEN-E.
- Hold payouts (keep accruing commission, just don't send money) until a valid form is on file. Say so in your terms. Our guide on how partner payouts work has the full lifecycle.
- Check the name on the form against the name on the payout account. A mismatch is the most common reason a 1099 bounces back or a bank rejects a payment.
- Re-request a form when the affiliate's details change. A W-8BEN generally stays valid until the end of the third calendar year after it's signed unless something changes, per the IRS instructions for the form; put a renewal reminder on it.
- If a US affiliate won't give you a correct taxpayer identification number, backup withholding applies. The IRS page puts the current rate at 24%, taken from future payments.
VAT and GST for programs outside the US
None of the above covers non-US tax. If you're a UK or EU business paying affiliates, VAT is usually the bigger admin job. A VAT-registered affiliate should charge VAT on their commission invoice (or reverse-charge it, depending on where you both are), and plenty of programs use self-billing so the affiliate doesn't have to raise an invoice at all. In the UK, HMRC's self-billing guidance says you need the supplier's agreement before you self-bill.
If your affiliates are spread across the EU, ask a VAT adviser before you build the invoicing flow. The rules depend on where each party is registered.
How payout tools handle forms
Most affiliate software now collects tax forms inside the partner portal, but who files the year-end return differs.
- Some tools collect the W-9 or W-8 and generate the 1099s for you to file.
- Some managed-payout services pay affiliates on your behalf, and the 1099-NEC instructions say the party that performs management functions over the payments "is responsible for filing information returns for payments of $2,000 or more paid to contractors". Read the provider's terms to see whether that's them or you.
- PartnerStack's own commissions page says it "processes payments on your behalf and distributes earnings to every partner" (PartnerStack). If you use a service like that, confirm in writing who issues the year-end forms.
We compared how each tool charges for this in affiliate software pricing 2026. PartnersWatch, our own product, collects W-9 and W-8BEN forms and produces 1099s on the Scale plan; commissions and payouts aren't on the Free plan. See commissions and payouts for the detail.
If you haven't launched yet, the order we'd suggest is: decide your commission model, write the payout and tax clauses into your terms, then build onboarding so the form is collected before anyone earns a cent. How to start a partner program walks through the rest.
Most of the programs in our directory pay monthly. These recurring software programs all publish their terms, if you want to see how established programs word their payout pages:
| Program | Partner types | Terms | Model |
|---|---|---|---|
| Analyze | Affiliate | 20% recurring | Recurring |
| GoMarble AI | Affiliate, Referral partner, Agency | 50% of first month, then 20-40% recurring for eligible months | Recurring |
| IGSendMail | Affiliate, Referral partner | 20% lifetime recurring | Recurring |
| PPCmate | Affiliate, Referral partner | 10% of referred advertiser deposits, lifetime | Recurring |
| Concord Privacy | Affiliate, Referral partner | Recurring commission (rate not published) | Recurring |
| mAIstermind GenGreeting Cards | Affiliate, Referral partner | 50% recurring on every customer payment | Recurring |
FAQ
Do I need to send a 1099 to affiliates in 2026?
Only if you paid a US affiliate $2,000 or more during 2026 and the payment isn't reported on a 1099-K by a payment platform. Below $2,000 a 1099-NEC isn't required under the IRS instructions revised 12/2026, though you can still file one. Payments to most US corporations are generally exempt.
What is the 1099-NEC threshold for 2026?
$2,000 per payee for payments made in calendar year 2026, up from $600. The IRS instructions say the threshold for tax years beginning after 2025 increased to $2,000 and may be adjusted for inflation from 2027. The same $2,000 applies to backup withholding on those payments.
Do foreign affiliates need to fill out a W-8BEN?
Usually, yes, if you're a US business. A foreign individual gives you a W-8BEN and a foreign company a W-8BEN-E. You keep it on file; it isn't sent to the IRS. It documents that the affiliate isn't a US person and lets them claim a treaty rate if one applies.
Do I withhold 30% from international affiliates?
Generally not when all the affiliate's work happens outside the US, because IRS Publication 515 sources personal-service income to where the services are performed, and foreign-source income generally isn't subject to US withholding. The 30% rate applies to most US-source income paid to foreign persons, subject to treaties. Check your case with a tax adviser.
Do affiliates paid through PayPal get a 1099-NEC?
Generally no. The IRS 1099-NEC instructions say card and third-party network payments are reported on Form 1099-K by the payment settlement entity instead. For 2026, a platform reports a payee only above $20,000 and more than 200 transactions, though it may send one for less.
When should I collect W-9 and W-8BEN forms from affiliates?
Before the first payout. Make a valid form a condition of payment in your program terms and keep commissions accruing until it's on file. Collecting at year end delays your 1099 filing, which for 2026 payments is due by 1 February 2027.
Is affiliate income taxable if I don't get a 1099?
Yes. The forms are about reporting. A US affiliate who earned $1,500 in 2026 and got no 1099-NEC still reports that income on their own return. Foreign affiliates follow their home country's rules.