California 1099 Form Requirements: Withholding, Deadlines, Penalties

California doesn’t have its own 1099 form. Businesses use the federal 1099 series, and the Franchise Tax Board (FTB) pulls most of what it needs from IRS data. What California does have, and what makes its 1099 filing requirements distinct, is a separate reporting threshold for nonemployee compensation, mandatory 7% withholding on many payments to nonresidents, and per-payee penalties for filings that arrive late or wrong. Starting with tax year 2026, the state’s 1099-NEC reporting threshold rises from $600 to $2,000, while the federal threshold stays at $600.¹²

Which 1099 Forms California Cares About

The forms that come up most often for California filers are the same ones the IRS uses:

Form 1099-NEC reports nonemployee compensation, including independent contractor pay and payments to attorneys.
Form 1099-MISC reports rents, royalties, prizes, and other miscellaneous income once payments reach $600 (or $10 for royalties).³
Form 1099-K reports payments processed through payment card networks and third-party settlement organizations.⁴

The 2026 threshold split matters in practice. Pay a contractor $1,200 for California work in 2026 and you still file a 1099-NEC with the IRS, but you have no corresponding FTB filing obligation. At $2,000 or more, both filings apply and the amounts should match.¹

For 1099-K, the federal reporting threshold has reverted to $20,000 in gross payments and more than 200 transactions per year.⁵ California generally follows that federal threshold, with one carve-out: app-based drivers on rideshare and delivery platforms get a 1099-K once gross payments reach $600, regardless of the higher federal number.⁶

How the FTB Gets the Data

Most 1099 information reaches California through the IRS Combined Federal/State Filing (CF/SF) Program. If you file 1099s electronically with the IRS and participate in CF/SF, the IRS forwards the California data to the FTB, and no separate state filing is required as long as the federal and state amounts match. This covers 1099-MISC, 1099-INT, 1099-K, and 1099-NEC.⁶

You have to file directly with the FTB when the state and federal amounts differ for any reason. Withholding reported on the Form 592 series always goes directly to the FTB regardless of CF/SF.

Payors with 250 or more information returns must file electronically with the FTB through its Secure Web Internet File Transfer (SWIFT) system. Under 250 returns, paper filing is allowed, though the FTB prefers electronic. The IRS uses a lower electronic filing threshold, so you can end up required to e-file federally while still being under California’s paper-filing ceiling.⁶

Withholding on Payments to Nonresidents

California requires withholding on many non-wage payments made to nonresidents for California-source income. The rate is 7% of the gross payment. Withholding is required once total payments to a nonresident payee exceed $1,500 in a calendar year; withholding on the first $1,500 is optional and left to the agent’s discretion.⁷

If you hire an out-of-state contractor to perform services in California and pay them $5,000 for the year, you’re the withholding agent. You withhold 7% of the gross amount (with the first $1,500 optional), remit that to the FTB, and report it on Form 592 with a Schedule of Payees listing each recipient and the amount withheld.⁸ Each payee also gets Form 592-B, which they need to claim credit on their California return.

Backup Withholding

Backup withholding runs on a parallel track and applies to residents and nonresidents alike. If a payee fails to provide a correct taxpayer identification number or fails to certify exemption on Form W-9, the payor must withhold 7% of all California-source income paid to that person.⁹ There’s no $1,500 floor and no ability to waive or reduce it. Backup withholding also replaces other withholding types, so you don’t stack it on top of the standard nonresident rate.¹⁰ Government entities and tax-exempt organizations are among the payees exempt from backup withholding.

Reducing or Eliminating Withholding

Three forms handle exemptions, reductions, and waivers, and the right one depends on the payee’s situation.

Form 590 is the Withholding Exemption Certificate. A payee uses it to certify no withholding is needed. Categories that qualify include California residents, corporations with a permanent place of business in California or qualified through the Secretary of State, partnerships and LLCs registered in California, tax-exempt organizations, and certain trusts and estates with California connections. A nonmilitary spouse of a servicemember covered by the Military Spouse Residency Relief Act can also claim it.¹¹

Form 589 is for a nonresident payee who expects significant deductible expenses against California-source income and wants withholding calculated on the net rather than the gross. The FTB reviews the request; if approved, the 7% applies to net California-source income. For most nonresidents, allowable expenses can’t exceed 50% of the gross payment. Online requests take about 10 business days; paper about 21. File it before payment, not after.¹²

Form 588 requests a full waiver of nonresident withholding, evaluated case by case. Some payments don’t need a waiver at all because withholding never applied: payments for goods rather than services, services performed entirely outside California, payments to government agencies, corporate director fees for board service, and income from qualified investment securities of an investment partnership.¹³ Foreign partners and members use Form 592-F, not Form 588.

Two Situations With Their Own Rules

Two categories of payment sit outside standard 1099 reporting but come up often enough that they’re worth flagging.

When California real property sells for more than $100,000, the buyer or escrow agent generally withholds tax from the seller’s proceeds. The default is 3⅓% of the sales price, though the seller can elect to have withholding calculated on estimated gain at rates that vary by entity type: 12.3% for individuals and most partnerships, 8.84% for corporations, 13.8% for S corporations, among others. This goes on Form 593.¹⁴

Pass-through entities that distribute California-source income to nonresident owners must withhold 7% on gross distributions over $1,500 per calendar year, the same rate and threshold as standard nonresident withholding. Reporting uses Form 592-PTE, due January 31 following the withholding year, with Form 592-B to each payee. A lower-tier entity that had tax withheld on its behalf uses Form 592-PTE to allocate that withholding to its own owners, whether resident or nonresident. Withholding isn’t required when the distribution is exempt, when the owner certifies the income was already reported on a prior California return, or when an approved Form 588 waiver is on file.¹⁵

Deadlines

Payee copies (1099 and 592-B) go out by January 31 following the close of the tax year.¹⁶
1099-NEC filed separately with the FTB (when required) is due February 28 on paper or March 31 electronically.¹
Form 592 remittance is quarterly: April 15, June 15, September 15, and January 15 of the following year.⁸
Form 592-PTE is due January 31 following the withholding year.¹⁵

If a due date falls on a weekend or holiday, it moves to the next business day.

Penalties

The FTB assesses information return penalties per payee under Revenue and Taxation Code Section 19183, tracking the federal tiered structure. For Forms 592, 592-PTE, 592-F, 593, and 1099s filed directly with the FTB:

Corrected within 30 days of the due date: $40 per return, capped at $300,000 per year ($100,500 for businesses averaging $5 million or less in gross receipts).
Corrected after 30 days but by August 1: $80 per return, capped at $600,000 per year ($268,000 for smaller businesses).¹⁷
Not corrected by August 1 or never filed: the full federal penalty applies, $250 per return with a $3,000,000 annual cap under IRC Section 6721(a).¹⁸

Each tier can be waived on a showing of reasonable cause and absence of willful neglect.

A separate penalty covers Form 592-B statements not delivered to the payee correctly and on time: up to $130 per statement with a $2,010,000 annual cap. For intentional disregard, the penalty rises to $330 or 10% of the amount required to be reported, whichever is greater, with no annual cap.¹⁷

The bigger exposure is agent liability. A withholding agent who fails to withhold the required 7% can be held personally liable for the uncollected tax plus interest and penalties. The FTB does not have to try to collect from the payee first.¹⁵

Filing Corrections

When an original filing contains errors, submit a corrected return covering only the returns that need fixing. Do not resubmit the full original file. A return you missed entirely goes in as an original, not a correction.⁶ Detailed correction formatting follows IRS Publication 1220. Moving quickly matters: the per-return penalty is substantially lower when the correction lands within 30 days of the original due date.

1
Franchise Tax Board. Guide to Information Returns Filed With California
2
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
3
Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
4
Internal Revenue Service. About Form 1099-K, Payment Card and Third Party Network Transactions
5
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill; Dollar Limit Reverts to $20,000
6
Franchise Tax Board. Guidance for Reporting Information Returns
7
Cornell Law Institute. California Code of Regulations 18 CCR 18662-4
8
Franchise Tax Board. 2026 Instructions for Form 592
9
State of California Franchise Tax Board. Backup Withholding
10
State of California Franchise Tax Board. Withholding
11
Franchise Tax Board. 2024 Withholding Exemption Certificate
12
Franchise Tax Board. 2026 Instructions for Form 589 Nonresident Reduced Withholding Request
13
Franchise Tax Board. 2026 Instructions for Form 588
14
Franchise Tax Board. 2026 Instructions for Form 593 Real Estate Withholding Statement
15
Franchise Tax Board. Pass-Through Entity Withholding
16
Franchise Tax Board. 2025 Form 592-B Resident and Nonresident Withholding Tax Statement With Instructions
17
Franchise Tax Board. FTB 1024: Penalty Reference Chart
18
Office of the Law Revision Counsel. 26 USC 6721: Failure to File Correct Information Returns