Industry guides
Taxes for attorneys and law firms: 1099 rules, 2026 deductions, deadlines and bookkeeping
How attorney and law firm taxes work in 2026: 1099-NEC box 1a vs 1099-MISC box 10, why corporations that provide legal services still get 1099s, QBI and Section 179 limits, the 72.5-cent mileage rate, estimated tax dates and penalties.
Prepared by Aldro Accounting · Updated · Sources checked
The quick answer
A self-employed attorney reports practice income on the individual return, which is due the 15th day of the 4th month after the tax year ends, and pays quarterly estimated tax: for 2026, on April 15, June 15 and September 15, 2026 and January 15, 2027. Clients that pay a law firm report attorneys' fees of $2,000 or more in box 1a of Form 1099-NEC, even when the firm is a corporation.
How taxes work for a law practice
Aldro is the cheapest way to get your business taxes done: $399 flat, with bookkeeping at $20 a month. The flat price covers every federal and state business return the practice needs for the year, including Schedule C, 1065, 1120-S or 1120.
Law practices have a few tax rules of their own. Payments to attorneys sit outside the usual corporate exemption from 1099 reporting, settlement money paid through a lawyer has its own box, and the IRS publishes an Attorneys Audit Techniques Guide to guide examiners who audit an attorney or a law firm and to give tax guidance to people in the industry.
1099-NEC box 1a vs 1099-MISC box 10
The IRS instructions say the term attorney includes a law firm or other provider of legal services. Attorneys' fees of $2,000 or more paid in the course of a trade or business go in box 1a of Form 1099-NEC.
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| Payment | Form and box | Threshold |
|---|---|---|
| Fees for the attorney's own legal services | Form 1099-NEC, box 1a | $2,000 or more |
| Settlement or other gross proceeds paid to an attorney | Form 1099-MISC, box 10 | $600 or more |
| Fee-splitting or referral fees between professionals | Form 1099-NEC, box 1a | Box 1a threshold |
| An attorney's payments to witnesses or experts | Form 1099-NEC, box 1a | Box 1a threshold |
Gross proceeds of $600 or more paid to an attorney in connection with legal services, regardless of whether the services are performed for the payer, go in box 10 of Form 1099-MISC. In the IRS example, an insurance company pays a claimant's attorney $100,000 to settle a claim and reports $100,000 as gross proceeds in box 10. The rules apply even when the attorney isn't the only payee, for example when the attorney's and claimant's names are both on one check.
The exemption from reporting payments made to corporations doesn't apply to legal services. A client must report attorneys' fees or gross proceeds to corporations that provide legal services.
Box 1a also covers fees paid by one professional to another, such as fee-splitting or referral fees, and payments by attorneys to witnesses or experts in legal adjudication.
If an attorney fails to provide its TIN, the attorney may be subject to a penalty under section 6723 and the payer must backup withhold on the reportable payments.
When the firm files its own 1099s
A firm that pays experts, contract attorneys or referral fees files information returns too. Form 1099-NEC is due on or before January 31, on paper or electronically. Form 1099-MISC is due February 28 on paper or March 31 if filed electronically.
A filer with 10 or more information returns in aggregate must file electronically. On a paper correction, don't check the VOID box, because it tells IRS scanning equipment to skip the form.
For information returns due in 2027, the general penalty is $340 per return, $60 if corrected within 30 days and $130 if corrected by August 1.
2026 numbers for law firm deductions
QBI deduction: for tax years beginning in 2026, the threshold is $403,500 for married filing jointly, $201,775 for married filing separately and $201,750 for all other returns, with phase-in ranges ending at $553,500, $276,775 and $276,750. Beginning in 2026, a taxpayer with at least $1,000 of qualified business income from an active trade or business may be able to claim a minimum deduction of $400.
Section 179: for 2026 the limit is $2,560,000, reduced dollar for dollar once Section 179 property placed in service exceeds $4,090,000. The cap for a sport utility vehicle is $32,000.
Mileage: from January 1, 2026 the standard rate for business use of a car, van, pickup or panel truck is 72.5 cents per mile. For an owned car, the standard rate has to be chosen in the first year the car is used for business. For a leased car it must be used for the whole lease.
Cash method: for 2026 a corporation or partnership meets the gross receipts test if its average annual gross receipts for the prior 3 tax years don't exceed $32,000,000.
Self-employment tax and quarterly estimates
A solo attorney or partner pays self-employment tax. When estimating 2026 net earnings from self-employment, use 92.35% of total net profit. For 2026 the maximum earned income subject to Social Security tax is $184,500.
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| Payment | Due |
|---|---|
| 1st | April 15, 2026 |
| 2nd | June 15, 2026 |
| 3rd | September 15, 2026 |
| 4th | January 15, 2027, not required if the 2026 return is filed by February 1, 2027 and the balance is paid in full |
Estimated payments are generally required if you expect to owe at least $1,000 for 2026 after withholding and refundable credits, and expect withholding and credits to be less than the smaller of 90% of 2026 tax or 100% of 2025 tax.
Which return a law firm files, and when
Form 1065 for a partnership is due the 15th day of the 3rd month after the tax year ends, and partners get their Schedules K-1 by the same date. Form 1120-S follows the same 3rd-month rule. Form 7004 requests an automatic 6-month extension.
Form 1040 and Form 1120 are due the 15th day of the 4th month after the tax year ends. Form 4868 extends Form 1040 by 6 months. Form 2553, the S corporation election, is due no more than 2 months and 15 days after the start of the tax year it takes effect, or any time in the year before.
For returns due in 2027, the late-filing penalty for a partnership or S corporation return is $260 per partner or shareholder per month. An income tax return more than 60 days late has a minimum penalty of the lesser of $535 or 100% of the tax due on it.
Bookkeeping for a law practice
Every rule above depends on clean books: fees by client for the 1099s you receive, payments to experts and referral partners for the 1099s you file, and mileage and equipment records for the deductions.
Aldro's bookkeeping at $20 a month covers unlimited bank and card accounts, monthly reconciliation and statements. Payroll processing and sales-tax filing aren't included. Our team prepares and files the year's returns, including the firm's Forms 1099-NEC.
Worked example
A solo attorney nets $120,000 in 2026 from her practice. Net earnings from self-employment are 92.35% of that, or $110,820, which is under the $184,500 Social Security wage base, so the whole amount is subject to both parts of self-employment tax. She drove 3,000 business miles, and at 72.5 cents a mile that's a $2,175 mileage deduction. A client who paid her $15,000 in fees reports it in box 1a of Form 1099-NEC, because the total is over $2,000.
Common questions
Do I have to send a 1099 to a law firm that's a corporation?
Yes. The exemption for payments to corporations doesn't apply to legal services, so attorneys' fees and gross proceeds paid to corporations providing legal services are reported.
What's the difference between 1099-NEC box 1a and 1099-MISC box 10 for attorneys?
Box 1a is for attorneys' fees for legal services, $2,000 or more. Box 10 is for gross proceeds paid to an attorney, such as a settlement, at $600 or more.
When are 2026 estimated taxes due for a self-employed lawyer?
April 15, June 15 and September 15, 2026, and January 15, 2027.
What are the 2026 QBI thresholds for attorneys?
$403,500 for married filing jointly, $201,775 for married filing separately and $201,750 for other returns, with phase-in ranges up to $553,500, $276,775 and $276,750.
What can a law firm expense under Section 179 in 2026?
Up to $2,560,000 of qualifying property, phasing out once property placed in service exceeds $4,090,000, with a $32,000 cap for an SUV.
The cheapest way to get your business taxes done: $399 flat.
Business tax filing is $399 USD a year, and it covers everything tax for that year.
How it works
- Tell us about your business. A two-minute form. No payment is collected through it.
- Get your next steps by email. We’ll email you the next steps within one business day. After you sign up we’ll send you a secure upload link for your documents.
- We file it. Our team prepares and files your return. Add bookkeeping for $20 a month if you want it.
What's included
$399 a year covers everything tax for that tax year.
- Every business return for the year. All the federal and state or provincial business returns you need for the tax year: Schedule C, 1065, 1120-S, 1120 and their state returns in the US; T2, or T1 with T2125, in Canada.
- More than one state. Multi-state returns are included at the same price.
- Your personal return. The owner’s personal return (1040 or T1) is included when it’s needed for the business income.
- Quebec. Quebec returns (CO-17, TP-1 and TP-80) are included. Our Quebec pages are in French, and our team works with you in English.
- Extensions and reminders. Extensions (Form 7004 or 4868) and quarterly estimate reminders are included.
- Information returns. 1099-NEC, T4/T4A and T5018 slips are included in the tax price.
- City and excise returns. City and local business tax returns, and state excise returns such as Washington B&O, are included in the yearly price.
- Franchise tax reports. State franchise tax reports, such as the Texas franchise tax report, are included.
- Estimated tax and instalment amounts. We work out your quarterly estimated tax payments in the US, or your CRA instalments in Canada, and tell you what to pay and when.
- Unfiled past years. Each unfiled prior-year return is $399 per tax year, the same flat price.
- Bookkeeping at $20 a month. Unlimited bank and card accounts, monthly reconciliation and monthly statements.
Basic inventory tracking for online stores, such as Shopify, is included. Full cost-of-goods reconciliation is quoted separately. Payroll processing and sales-tax filing aren’t included in bookkeeping. Prices are in USD. Our team prepares and files your return.
Sources
- IRS: Instructions for Forms 1099-MISC and 1099-NEC · checked October 31, 2026
- IRS: Revenue Procedure 2025-32 · checked October 31, 2026
- IRS: Audit Techniques Guides · checked October 31, 2026
- IRS: 2026 business standard mileage rate · checked October 31, 2026
- IRS: Publication 509, Tax Calendars · checked October 31, 2026
- IRS: 2026 Form 1040-ES · checked October 31, 2026
This guide explains general rules from the sources listed. It isn’t tax advice for your situation.