U.S. · Tax forms
1099-NEC box 2, direct sales of $5,000 or more.
A checkbox, not a dollar amount, and the 1099-MISC box 7 alternative.
Box 2 of Form 1099-NEC is a checkbox. Enter an “X” for sales by you totaling $5,000 or more of consumer products to a person on a buy-sell, deposit-commission or other commission basis for resale anywhere other than in a permanent retail establishment. Do not enter a dollar amount. You may use 1099-MISC box 7 instead, but not both.
Check the dollar line
Result
What it is for
The box exists for direct selling arrangements such as buy-sell and deposit-commission models, where a company sells consumer products to a person who resells them somewhere other than a permanent retail establishment, and the payer’s total sales to that person reach $5,000. The instruction is about the payer’s sales to the recipient, not about what the recipient earns in commissions.
Two forms, one report
The instructions say you may either use box 2 on Form 1099-NEC or box 7 on Form 1099-MISC. Report these sales on only one form. If you use Form 1099-NEC to report the sales, you are required to file the Form 1099-NEC with the IRS by January 31.
The statement need not be the official form
The report you must give to the recipient for these direct sales need not be on the official form. The instructions say it may be a letter showing this information along with commissions, prizes, awards and similar items.
What it does not mean
Checking this box does not report the sales amount, and it does not by itself decide whether the recipient is an employee, a contractor or a customer. Payments for services to the same person are separate and go in box 1a if they reach $2,000.
Worked example
A kitchenware company sells $6,200 of products during the year to an independent distributor on a buy-sell basis, for resale at home parties. The company marks the X in box 2 of Form 1099-NEC, with no dollar amount, and files the 1099-NEC with the IRS by January 31. It also pays the distributor $2,600 in commissions for services; that is reported separately in box 1a. If it had chosen to report the direct sales on Form 1099-MISC box 7 instead, it would not also check box 2.
Related decoders
More 1099 box pages: 1099-MISC box 1, rents, 1099-NEC box 4, backup withholding at 24 percent, 1099-MISC box 4, federal income tax withheld, 1099-MISC box 6, medical and health care payments, 1099-MISC box 10, gross proceeds paid to an attorney. For the 1099-R box 7 codes see the 1099-R distribution codes lookup.
Sources
- Instructions for Forms 1099-MISC and 1099-NEC (12/2026): the box-by-box section for this form. Read November 2, 2026. The IRS page was last reviewed July 1, 2026 and labels the instructions 12/2026.
Edition read: Instructions for Forms 1099-MISC and 1099-NEC (12/2026). The instructions say the $2,000 minimum threshold applies for tax years beginning after 2025 and may be adjusted for inflation beginning in calendar year 2027; check which year your own form covers. This page summarizes the instructions and does not replace them.
Frequently asked questions
What is box 2 on a 1099-NEC?
A checkbox for payer direct sales totaling $5,000 or more of consumer products for resale outside a permanent retail establishment. No dollar amount is entered.
Can I use 1099-MISC box 7 instead?
Yes. The instructions say you may use box 2 on Form 1099-NEC or box 7 on Form 1099-MISC, but report these sales on only one form.
When is the 1099-NEC with box 2 due to the IRS?
By January 31 if you use Form 1099-NEC to report the direct sales, per the instructions.
Do I enter the sales amount?
No. The instructions say not to enter a dollar amount in this box.
Does the recipient need the official form?
No. The report you give the recipient for these direct sales need not be on the official form and may be a letter showing the information with commissions, prizes, awards and similar items.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box means for your return. Everything runs in your browser; nothing you enter is sent anywhere.