How to Pay UGC Creators: 1099 (US) and T4A (Canada) Explained

Paying a creator is the easy part. Doing it in a way that doesn't create a mess in January is where most brands slip — usually by paying first and asking for tax details later.

This covers the US and Canada, including the two rule changes that took effect for 2026.

Not tax advice. Rules change and situations differ. Confirm with your accountant before filing.

Contents

1. The short version
2. Collect the tax form before you pay
3. Payment methods
4. US: the new $2,000 1099-NEC threshold
5. Canada: T4A Box 048
6. Cross-border payments
7. GST/HST
8. Common mistakes
9. FAQ

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The short version

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Collect the tax form before you pay

This is the single highest-leverage habit in the whole process. Make the tax form part of onboarding, alongside the contract, not part of your year-end scramble.

The reason is simple: creators have very little incentive to respond to a request for tax paperwork eleven months after they've already been paid. Before payment, they respond immediately.

United States — Form W-9 if the creator is a US person, which gives you their legal name, address, and TIN. Form W-8BEN if they're not, which establishes foreign status and any treaty benefit.

Canada — no equivalent standard form. Collect legal name, mailing address, and either SIN (individual or sole proprietor) or Business Number (incorporated). Build a short intake form rather than asking ad hoc; SINs shouldn't live in email threads or a shared spreadsheet.

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Payment methods

Two rules worth adopting: state in the contract who covers transaction fees, and never let "gifted product" quietly replace a fee that was agreed in cash. Product received in exchange for services is taxable income to the creator, and treating it as free is how brands end up with under-reported payments.

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United States: the new $2,000 1099-NEC threshold

This changed for 2026 and most articles still have the old number.

For decades, businesses had to issue Form 1099-NEC to any contractor paid $600 or more in a calendar year — a figure that had not moved since 1954. The One Big Beautiful Bill Act, signed in July 2025, raised it. The reporting threshold for Forms 1099-NEC and 1099-MISC is now $2,000, applying to payments made on or after January 1, 2026, and it will be adjusted for inflation annually starting in 2027.

What that means in practice:

• Pay a creator less than $2,000 across the year → no 1099-NEC required. Their income is still taxable; you simply don't file the slip.
• The threshold is per creator, per calendar year, aggregated. Ten $250 videos to the same creator is $2,500 and crosses it.
• The first forms under the new floor cover tax year 2026 and go out in early 2027. Forms for 2025 still follow the old $600 rule and were due in early 2026.
• Incorporated creators are generally exempt from 1099-NEC reporting.

One important exception: payments made by credit card or through a third-party payment network aren't reported on 1099-NEC — the processor handles that on 1099-K instead. Filing both would double-report the same income, so track which method you used. (The 1099-K threshold, separately, reverted to $20,000 and more than 200 transactions.)

Deadline: 1099-NEC is due to both the recipient and the IRS by January 31.

Keep records of everything you paid regardless of whether a form was required. The threshold controls filing; it doesn't control audits.

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Canada: T4A Box 048

Canadian businesses report fees paid for services on a T4A slip, Box 048 (Fees for services). The CRA's rule is that payments exceeding $500 in a calendar year must be reported.

Details that matter:

• $500 is per payee, per year, aggregated — not per invoice. Ten $60 payments to one creator crosses it.
• Box 048 excludes GST/HST. Report the fee, not the tax you paid on top.
• Incorporated creators generally don't get a T4A for fees for services. The requirement targets unincorporated individuals and sole proprietors. (Construction is different — that's the T5018.)
• Non-residents are reported on T4A-NR, not T4A.
• Deadline: the last day of February following the calendar year.
• No CPP or EI is deducted from a genuine contractor's payment.

The enforcement change worth knowing

Since 2011 the CRA has operated a moratorium — Box 048 was legally required, but penalties weren't assessed for failing to complete it. That moratorium is ending. Finance announced on October 30, 2025 that it will wind down, with enforcement resuming in the 2026/2027 tax year, and the CRA has already begun assessing penalties in the trucking industry for 2025 and later years.

The practical takeaway: filing Box 048 has always been the requirement, and the free pass is expiring. Build the habit now rather than discovering it when penalties start. When in doubt, issue the slip — there's no penalty for reporting a payment you didn't have to.

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Cross-border payments

US brand paying a Canadian creator: collect Form W-8BEN, which certifies foreign status and claims treaty benefit. Services performed entirely outside the US by a non-US person are generally not US-source income, so no 1099 and typically no withholding — but the W-8BEN is what protects you from the default 30% backup withholding. Get it before you pay.

Canadian brand paying a US creator: if the services are performed outside Canada, no T4A-NR is generally required. If the creator performs services in Canada, T4A-NR applies and withholding may too.

Cross-border is the area where the general guidance runs out fastest. If this is a regular part of your programme rather than a one-off, spend an hour with an accountant once and write down the answer.

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GST/HST

Canadian creators must register for GST/HST once their revenue exceeds $30,000 over four consecutive calendar quarters. A registered creator adds GST/HST to their invoice, and the rate follows the customer's province — 13% in Ontario, 5% in Alberta, and so on.

Two consequences for brands:

• The tax is on top of the fee, not inside it. A $500 fee from a registered Ontario creator invoices at $565.
• If you're registered, you can claim it back as an input tax credit. Keep the invoices.

An unregistered creator under the threshold simply doesn't charge it. Ask which applies before you agree the fee, so nobody is surprised by the invoice.

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Common mistakes

Paying before collecting tax details. The fix is a five-minute intake form at contract signature.

Treating gifted product as free. It's compensation and it's taxable to the creator.

Missing the aggregate. Thresholds are annual totals per creator, not per payment. Small repeat deals add up quietly.

Misclassifying a creator as an employee. A contractor sets their own hours, uses their own equipment, and works for other clients. If you're directing the work like an employer, the label in the contract won't save you.

Storing SINs badly. Personal information is covered by PIPEDA. Collect only what you need, store it somewhere access-controlled, and don't email it.

Assuming the old US threshold. $600 was the number for decades. For 2026 payments it's $2,000.

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FAQ

Do I have to issue a 1099 for a $500 UGC video? Not for 2026 payments — the threshold is now $2,000 per creator per year. But if you commission four more videos from the same creator, you cross it. Track the annual total.

Do I need a T4A for every Canadian creator I pay? Only for unincorporated creators paid more than $500 across the calendar year. Incorporated creators generally don't require one.

What if I pay creators through PayPal or Stripe? In the US, payments through a third-party network are reported by the processor on 1099-K, not by you on 1099-NEC. In Canada, the payment method doesn't change your T4A obligation.

Does gifted product count toward the threshold? Yes — it's compensation at fair market value and counts toward the annual total.

When do I need to collect a W-9? Before the first payment. Making it part of contract signature is the only reliable way.

Do I withhold tax from a creator's payment? No, not for a genuine independent contractor in either country. They handle their own taxes. Withholding is a sign the relationship may actually be employment.

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