AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Usually not. Form 1099-NEC is a US information return filed by payers in the course of a trade or business when payments reach the threshold, which is $2,000 for tax years beginning after 2025, and a Nigerian company with no US operations generally has no reason to file one. That changes nothing about your tax: as a US tax resident you report all freelance income on Schedule C, so your own invoice and payment log becomes the record.
How the 1099 system works
Form 1099-NEC exists so the IRS can match what businesses pay contractors with what contractors report. The IRS says a payer generally must file one when four things are true: the payee is not an employee, the payment is for services in the course of the payer's trade or business, the payee is an individual, partnership or estate (or in some cases a corporation), and the payments reach the threshold for the year (IRS, reviewed May 2026).
The current instructions for Forms 1099-MISC and 1099-NEC set that threshold at $2,000 of nonemployee compensation for tax years beginning after 2025, and say it may be adjusted for inflation from 2027. Payments under the threshold do not need a form, but they are still income to you.
Why Nigerian clients do not send one
A Lagos agency or Abuja start-up is not part of the US information-return system unless it has US operations or a US entity paying you. In practice you should expect no 1099 from a Nigerian company. A few situations differ:
- A US subsidiary or US entity pays you. If the Nigerian group pays through a US company, that company may issue a 1099-NEC.
- A payment platform is in the middle. Card processors and payment apps can issue Form 1099-K. The IRS says third-party settlement organisations report above $20,000 in more than 200 transactions for goods or services, and may send one below that; see 1099-K from payment platforms.
- The client asks you for a form. A Nigerian client may ask for a W-9 or W-8BEN out of habit or for its own records; see which form to give.
Instead of a 1099, what you usually get from a Nigerian client is a withholding tax receipt, if tax was deducted. Keep it: it shows the gross fee, the amount deducted and the client's tax ID, which you need for any foreign tax credit.
No form, same tax
US tax residents are taxed on worldwide income, and the IRS treats net profit from your business as income on your Form 1040 whether or not any information return was issued. Not receiving a 1099 is not a reason to leave income off; it only means the IRS has no matching record, and the burden of proof sits entirely with you if your return is ever questioned.
Bank records do not fill the gap on their own either. An incoming wire from Nigeria shows that money arrived, not what it was for, whether it was a fee, a reimbursement of expenses or a gift from family. Label each receipt as it lands, while you still remember, and keep business and personal money in separate accounts so the ledger and the statements tell the same story.
Building your own record
Replace the missing 1099 with a simple ledger, kept through the year rather than rebuilt in April:
| Field | Why it matters |
|---|---|
| Invoice number and date | Links each payment to the work |
| Client name and Nigerian tax ID | Needed on withholding tax receipts and any credit claim |
| Gross amount and currency | Schedule C reports gross receipts before any deduction |
| Withholding tax deducted | Possible foreign tax credit; never netted silently |
| Date received and account | Sets the exchange rate date and supports FBAR records |
| Rate used and dollar value | The IRS wants dollars at the rate when received |
Worked example (illustrative figures)
Three Nigerian clients pay you $2,500, $1,200 and ₦3,000,000 in a year. At an example rate of ₦1,500 per dollar the naira payment is $2,000, for total gross receipts of $5,700. None sends a 1099. One deducted 10% Nigerian withholding tax from the $2,500 invoice, so you received $2,250: Schedule C still shows $2,500 gross, and the $250 goes to your foreign tax credit file with its receipt.
If you pay subcontractors yourself
The rules run the other way too. If your freelance business pays a US-based subcontractor, say a copywriter in Dallas who helps on a Nigerian client's campaign, you are the payer in the course of a trade or business, and you may need to file Form 1099-NEC once your payments to that person reach the $2,000 threshold for the year. Collect a Form W-9 before you pay. If you pay a nonresident, for example a developer in Lagos, the IRS points payers to Form 1042-S and Publication 515 instead, and withholding may be required for US-source payments; work done entirely in Nigeria raises different questions, which a preparer can confirm.
Keeping your own payments clean protects your expense deductions: an expense you cannot document, or a contractor you should have reported, is the first thing to be challenged.
Where Pryme fits
Pryme invoicing keeps invoice numbers, amounts and payments together, and a verifiable statement gives a clean year-end record a preparer can rely on. See also record-keeping for naira and dollar income.
Questions people ask
Will a Nigerian company send me a 1099?
Usually not. Form 1099-NEC is a US information return, and a Nigerian company without US operations generally does not file it.
Do I have to report income if I did not get a 1099?
Yes. US tax residents report worldwide income, including freelance fees with no information return.
What is the 1099-NEC threshold now?
The IRS instructions give $2,000 for tax years beginning after 2025, which may be adjusted for inflation from 2027.
What do I use instead of a 1099 from foreign clients?
Your own ledger of invoices and payments, bank statements, and any Nigerian withholding tax receipts.
Sources
- IRS: Instructions for Forms 1099-MISC and 1099-NEC · accessed Oct 2026
- IRS: Reporting payments to independent contractors (reviewed 22 May 2026) · accessed Oct 2026
- IRS: Understanding your Form 1099-K (reviewed 28 Jun 2026) · accessed Oct 2026
- IRS: Self-employed individuals tax center (reviewed 27 Sep 2026) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.