Beginning in reporting 2023 1099 information, if you are filing 10 or more 1099's, regardless of type, you must file electronically with the IRS using the FIRE
Beginning in 2020, the IRS has changed the 1099-MISC requirements. Those items that were reported in Box 7 of the 1099-MISC, will now be reported in Box 1 on the Form 1099-NEC. The IRS has maintained all the same requirements for the 1099-NEC as they were for the 1099-MISC.
Forms 1099 and Ordering Information
- SBX fills in the required information on two or three-per-page pre-printed 1099 forms depending on the type of 1099.
- Where to get the forms: These forms can be acquired at any major office supply store or can be ordered from The SOLV Group. Ordering from The SOLV Group allows purchasing forms in just about any quantity needed without having to purchase 50 forms when only 12 is needed. https://qnet.e-quantum2k.com/~ibf/cgi-bin/login-client.cgi?Client=016138
- Caution, be careful ordering from the IRS, they may still send out carbon copy versions not intended for modern laser printers!
- Send vendors IRS Form W-9 to gather required information for reporting, including SS# or EIN.
Who Gets a 1099 - IRS Criteria
Any qualifying vendor paid $600 or more during the year for any of the following items. Qualifying vendors include individuals, partnerships, and LLC's. It does NOT include corporations or government agencies. There are two exceptions to the business type rule: attorneys and medical providers always get a 1099.
1099-NEC - 3 per page
- Box 1: Report nonemployee compensation (NEC) of $600 or more. This may include: fees, commissions, prizes, and awards for services performed as a nonemployee; other forms of compensation for services performed for a trade or business by an individual who is not an employee; and fish purchases for cash.
1099-MISC - 2 per page
- Box 1: Rent paid to a property owner (not reportable if paid to a real estate agent)
- Box 6: Payments to medical providers for healthcare services. This includes paying for flu shots or physicals for your employees. The only medical providers exempt from 1099 reporting are tax-exempt or federally owned hospitals or extended care facilities.
- Box 10: Gross Proceeds paid to an attorney. Report payments that are made to an attorney in the course of business or in connection with legal services, but not for the attorney's services, for example as in a settlement agreement.
There are more reportable payments that are extremely unlikely for a typical local government (like fish purchases in cash). For detailed requirements of all reporting boxes on form 1099-MISC, see the IRS Instructions for Form 1099-MISC.
Deadlines
- Furnish payee with statement by January 31 regardless of form being filed.
- 1099-NEC Copy A and form 1096 are due to the IRS by January 31st
- 1099-MISC Copy A and form 1096 are due to the IRS by February 28th. Mail 1099-Copy A and form 1096 to:
Department of the Treasury
Internal Revenue Service Center
P.O. Box 219256
Kansas City, MO 64121-9256
Best practice is to complete all 1099 filing requirements by January 31.
SBX 1099 Setup
Identify Qualifying Vendors
Go To Transactions > Vendor Accounts
- Highlight desired Vendor
- Click View
- Review complete Address and Contact Info, including SS/EIN#
- Check Requires 1099
- If a completed W-9 is on file, check W9 On File
- To override the $600 minimum, check Mandatory
Convert 1099-MISC Box 7 to 1099-NEC Box 1
Functionality has been added to allow for all expense codes previously reported as MISC-7 to be converted to NEC-1.
Go to Reports > 1099 Xref
1099 Chart of Account Setup
Go To Transactions > Chart Of Accounts > Line View
Identify Reportable Expenses
- Expense codes with OB, object range, of 40-49 and 60-64 usually represent payment for services, medical care, and rent.
- Use the 1099 column to assign MISC, for 1099-MISC, and the Box column to assign 1 for rent, 6 for medical care, or 10 for gross payments to an attorney.
- Use the 1099 column to assign NEC, for 1099-NEC, and the Box column to assign 1 for non-employee compensation.
Once an expense code is assigned, any expenses paid to a qualifying vendor with that expense code will be included for 1099 reporting.
Review Vendor Totals
Go to Reports > Annual Reports > Print Vendor Totals
- Select Tax Year
- Choose Expenditures and Claims this will exclude revenue and payroll entries
- Click Generate to populate the vendor totals
- Filter Required 1099 and W9 On File to view vendors with required 1099 and W9.
Review the list for vendors over $600 that are not corporations or other governments. Investigate any vendors that are not obviously corporate and not already flagged for a 1099.
If the 1099 column is not visible, use the Columns button in the Chart Of Accounts to turn it on.
Produce and Print 1099 Forms
Go To Reports > 1099 Information
- Select the Tax Year
- Select Type MISC or NEC
- Click Generate 1099s , review the 1099s that populate. If there are missing 1099s that need to be added, go back and check the vendor setup or the expense code setup.
- To review the expenses contributing to the 1099 total for each vendor, click X-Ref Report and click Preview.
Print Forms 1099 Forms and Form 1096
- Confirm entity information is filled in correctly for ID, Name, Address, etc. Contact information is the 1099 preparer.
- Select Form 1099
- Load 1099 Copy-B (for vendor) into the printer. Click Printer to start the printing.
- Load 1099 Copy-C (for your records) into the printer, click Printer to print
- Load red 1099 Copy-A (for IRS) into the printer,click Printer to print
- Select Form 1096.
- Load Form 1096 into the printer, click Printer to print.
