1099-NEC vs 1042-S: the US tax forms an AI training platform may send you

Two forms, split by the same line as W-9 and W-8BEN

A US company that pays contractors reports those payments to the IRS on information returns, and sends you a copy. Which form it uses follows the same split as onboarding: US persons who gave a W-9 are in 1099 territory; foreign persons who gave a W-8BEN are in 1042-S territory.

Form 1099-NEC: nonemployee compensation

The IRS page About Form 1099-NEC is one sentence long: "Use Form 1099-NEC to report nonemployee compensation." That is pay for services from someone who is not an employee, which describes contractor work on an AI training platform.

The current Instructions for Forms 1099-MISC and 1099-NEC set out the details:

• Threshold. A business files a 1099-NEC for each person it paid at least $2,000 during the year for services by a non-employee. The instructions note the threshold increased to $2,000 for tax years beginning after 2025 and may be adjusted for inflation from 2027.
• Timing. The form must be filed with the IRS on or before 31 January.
• Payment networks. Payments made by payment card or through third-party networks are reported by the payment settlement entity on Form 1099-K, and are "not subject to reporting" on the 1099-NEC. So a US contractor paid through a payment service may see a 1099-K from that service rather than a 1099-NEC from the platform.

Form 1042-S: US source income paid to foreign persons

The IRS page About Form 1042-S says the form reports income and amounts withheld as described in its instructions. The Instructions for Form 1042-S are more specific:

• What goes on it. Amounts from US sources paid to foreign persons, "even if no amount is deducted and withheld from the payment because of a treaty or Internal Revenue Code exception". Compensation for independent personal services performed in the United States is on the list.
• What does not. "Foreign source income is generally not required to be reported on Form 1042-S."
• Timing. Filed with the IRS and furnished to the recipient by 15 March of the following year.

The second point matters for remote work. Under the IRS source rules in Publication 515, the place where services are performed determines the source of the income. Why the place of work matters so much is covered in why US platforms withhold tax from non-US contractors.

Why many contractors receive neither

Mercor's contractor documentation, summarised in how you actually get paid, states that EU-based contractors will not receive a 1099 form or equivalent and should report from Stripe payout records and their own bookkeeping. Other platforms on this site mostly do not say what they issue.

Not receiving a form does not settle whether you owe tax anywhere; it only means no US information return was filed for you. Your own records of what each platform paid you are the document you are most likely to need, for whatever your home country requires.

Everything here describes how the IRS explains these rules; it is not tax advice. Check your own situation with a tax professional who knows both US rules and those of the country you live in.

Labeling Jobs does not give financial or tax advice.