What 1099-NEC and 1099-K are
Both forms are information returns. Someone else files them with the IRS and sends you a copy, so the IRS knows money was paid to you. Neither one is a bill, and neither one changes what you owe. Your tax is based on the income you actually received.
- Form 1099-NEC (Nonemployee Compensation) is filed by a business that paid you for services in the course of its trade or business. Under the current Instructions for Forms 1099-MISC and 1099-NEC, for tax years beginning after 2025 the filing threshold is $2,000 paid to you in the year (it was $600 before), and it may be adjusted for inflation starting in 2027.
- Form 1099-K is filed by payment card processors and payment apps or online marketplaces (third party settlement organizations, or TPSOs). See Understanding your Form 1099-K.
When a daycare provider gets a 1099-NEC
Most tuition comes from parents paying for their own family's care. The 1099 instructions say to report only payments made in the course of a trade or business; personal payments are not reportable. So a parent paying tuition generally won't send you a 1099-NEC.
You might get one when a business or organization pays you directly for care, for example an employer that pays a provider for its workers' children, and the total reaches the threshold. Payments by federal, state, or local government agencies are also reportable under the same instructions. How a subsidy or food-program payment is reported depends on the payer, so check any form you receive against your own deposit records.
When you get a 1099-K
The IRS explains two situations on its Form 1099-K page:
- Card payments you take directly (credit, debit, or gift card through a card processor): you get a 1099-K from the processor no matter how many payments or how much.
- Payment apps and online marketplaces: they must send a 1099-K when payments for goods or services total over $20,000 in more than 200 transactions. They may send one for lower amounts.
Issuers must send your copy by January 31. If parents pay you through an app, you may get more than one 1099-K, one per platform.
Reporting on Schedule C
If you run your daycare as a sole proprietor (including a single-member LLC that hasn't elected corporate treatment), the IRS says to report 1099-K business payments on Schedule C (Form 1040), Profit or Loss from Business. The same goes for 1099-NEC amounts and income with no form at all.
Gross receipts on Schedule C should come from your own records: tuition by family, deposits, and receipts. Use the 1099 forms as a cross-check, not as your income figure. Our Schedule C vs Form 8829 guide covers where the rest of your daycare numbers go.
How to avoid double-counting
The same dollar can show up in more than one place. A parent pays through an app, it lands in your bank account, and the app's 1099-K reports it too. Count it once.
- Start with your income log. List every payment received in the calendar year, by family and by method (cash, check, app, card).
- Tag payments by source. Mark which ones came through each app or card processor, so you can tie each 1099-K total to a group of entries.
- Reconcile the gross amount. Per the IRS page What to do with Form 1099-K, box 1a is gross. It isn't reduced for fees, refunds, credits, or discounts. Report the gross amount in your receipts. Refunds and returns reduce gross receipts, and processing fees are a deductible business expense on Schedule C. Keep records that support both.
- Separate personal payments. Money from friends or family as gifts or repayment of personal expenses isn't taxable and shouldn't be on a 1099-K. Mark such payments as non-business in the app when you can.
- Fix wrong forms with the issuer. If a 1099-K is wrong or duplicated, ask the filer (top left of the form) for a corrected form. The IRS says it can't correct a 1099-K for you, and you shouldn't wait to file.
Keep the forms, the reconciliation, and any correspondence with your other audit records.
Frequently asked questions
Will parents send me a 1099-NEC for daycare tuition?
Generally no. The 1099-NEC is for payments made in the course of a trade or business. Personal payments, such as a parent paying for their own child's care, are not reportable on it.
What is the 2026 Form 1099-K threshold for payment apps?
Payment apps and online marketplaces must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, though they may send one for less. Card processors send one for direct card payments regardless of amount.
Do I have to report daycare income if I don't get a 1099?
Yes. The IRS says you must report all income from goods or services, whether or not you receive a Form 1099-K or 1099-NEC.
How do I avoid counting the same payment twice?
Build gross receipts from your own income records, then tie each 1099 total to the matching entries. Use the forms as a cross-check, not as an extra amount to add.
Reconcile 1099s in the Tax Workbook
Log tuition by family and payment method all year, then tie each 1099 to your income total in minutes.