QuickBooks 1099 Year End Reminders
QuickBooks® Desktop software editions have a different process of printing the QuickBooks® 1099 MISC Year-End tax forms than the QuickBooks® Online edition (Plus).
Accordingly, bookkeepers, accountants, and business owners will find this article appropriate for preparing the QuickBooks® 1099 tax forms in the desktop editions. However, you can apply the following 1099 Year-End tax planning and to-dos to both desktop and online editions.
Who should receive a QuickBooks® 1099 tax form?
You will need to print and file with the IRS a 1099 MISC tax form for every unincorporated vendor you have paid more than $600 in cash and checks for either rents or attorney fees. For services, the IRS has created a new form – 1099 NEC tax form. Be sure you place your order for the correct 1099 tax form to meet your business needs. Any questions, call 800-216-0763.
Terms you need to understand
To enumerate the 3 conditions needed to send a 1099 MISC tax form (entity type, payment method and amount, what was purchased) read on:
These entities are NOT CORPORATIONS:
Business entities that operate as a partnership, LLP, LTD, limited liability company, LLC, & Co., and/or a sole proprietor/individual. If your vendor operates as one of these entities you may need to send a 1099 MISC tax form. Businesses do not need to send a 1099 MISC tax form to a corporation. Furthermore, payments to a corporation should include the corporation’s full legal name on the check. Corporations have corporate descriptor as a suffix. For example, typical corporation names end with a Corp, Inc, PC,.There is one common exception that excludes corporations from receiving a 1099 MISC tax form.
If you make payments in excess of $600 to Attorney’s/Lawyers, you must send them a 1099 MISC tax form even if they are incorporated.
QuickBooks will only print 1099s for Vendor names, so avoid using the “other name” name type for payments that may need to be included in a 1099.
More than $600:
- In Cash and checks: Only your cash and check payments will be included in a 1099 MISC tax form. You should NOT include Credit and debit card payments. Credit and debit card merchant processors will send a 1099 MISC tax form to your vendor for these types of payments.
- At this point, make sure QuickBooks® software is excluding all debit card payments by using the transaction type of “check” and entering the correct code in the reference field. QuickBooks® recognizes these codes to signify debit card payments: Debit, Debitcar, DBT, DBT card, DCard, Visa, Mastercard, MC, MCard, Chase, Discover, Diners, PayPal.
- Keep in mind that all journal entries regardless of reference number posted to a chart of account containing 1099 payments will appear on the 1099 MISC tax form. Avoid using Journal entries to post debit card payments from your checking account
- Moreover, all transactions entered on the credit card transaction type will be excluded from the 1099 MISC tax form.
Rents or Services:
- Rents: Payments for rents for office space including amounts paid to you for home office space, storage space, and machine rental require a 1099 MISC tax form to be sent. Use 1099 MISC tax form.
- Services – typical services (but not an all-inclusive list): Independent contractors, subcontractors, commissions, consultants, cleaning services, repair services professional fees including attorneys and accountants, referral fees, entertainers, and temporary help. Use 1099 NEC tax form.
November & December QuickBooks® 1099 Year End Tasks
A. Select those accounts within the chart of accounts that could possibly contain payments to 1099 vendors
Verify that you have correctly coded your current year vendor payments, so they will be included in the QuickBooks® 1099 MISC tax form by taking the following steps:
Review your 1099 mapping. Determine if any accounts in your chart of accounts will ever contain QuickBooks® 1099 vendor payments.
Edit menu > preferences >Tax:1099 Preferences > Company preferences > click on the “click here to map your accounts”
Next, for those identified accounts within the chart of accounts that may include a payment made to a QuickBooks® 1099 vendor make sure the account is mapped to the correct box on 1099 Misc tax form:
Select box 7 for payments made from QuickBooks® software for services or
Select box 1 for payments made from QuickBooks® software for Rents.
If you would like help with this process, give us a call at 800-216-0763 and find out about our pay per call for QBALANCE support for your QuickBooks® software.
B. Verify that your UNINCORPORATED vendors are marked correctly in QuickBooks® software.
- At this point, run the default QuickBooks® 1099 report and print this report to paper as follows:
Reports menu > vendors > 1099 summary> change the date range to this year-end and print.
You will print the 1099 Misc tax forms and the 1096 transmittal form from QuickBooks® software for all vendors displayed on this report.
- Next, modify this same report > by changing the 1099 Options on the report button bar from 1099 vendors to all vendors:
*”Reprinted with permission © Intuit Inc. All rights reserved.”
Review this all-inclusive vendor report (step 2). For each vendor, you believe meets the 1099 year-end criteria verify that the name and amount appear on the default 1099 report. As a reminder the 1099 criteria
is entity type; payments type and amount; and payments for services or rents.
Troubleshooting the Default 1099 Tax Form Summary Report
i. During your review, when the vendor is a corporation make sure you have listed with the name the appropriate suffix. (Corp., Inc. or PC, etc.). Specifically, to modify the vendor name return to the vendor center and edit the vendor record.
ii. Is a vendor missing from the default QuickBooks® 1099 report? You need to verify that the vendor’s record in the vendor center has that vendor tagged as “eligible for a 1099”:
Vendor center > edit the vendor > click on tax settings and mark that the vendor is eligible for 1099. Furthermore, if you do not have the vendor’s tax id temporarily enter 99-9999999 as an ID.
Likewise, if you are unsure what entity type the vendor is, mark them eligible to receive 1099. Continue your review until you have successfully marked all potential QuickBooks® 1099 vendors as eligible to receive 1099. In fact, the IRS does not penalize for sending 1099 when it is not required. Contrarily, the IRS can assess a penalty when you fail to send 1099 MISC tax forms.
C. Reprint the default QuickBooks® 1099 year-end report
The QuickBooks® 1099 standard report is now ready for your use as an important tool in gathering missing information. Thus, for those vendors you have marked with a tax id of 99-9999999, you should request a completed W-9 form. A W-9 form will let you know if the vendor is a corporation and provide the correct spelling of the vendor name and provide their EIN or Social Security number. You can update the vendor record accordingly, changing the tax ID and if applicable un-marking eligible for 1099 (when a corporation).
Is the vendor still not appearing in the default QuickBooks® 1099 report? Determine which chart of accounts the vendor payments are posted to. Next, review your 1099 mapping again and make sure those accounts are pointing to Box 7 or Box 1 of the 1099 form. Remember, if the vendor was paid with a credit or debit card and had less than $600 paid in cash or checks, you are not required to send 1099.
As a result of your efforts above, when it comes time to print the 1099 MISC year-end tax forms, you will have no problems.
Order Your QuickBooks® compatible 1099 MISC Tax Forms in December
Count the number of potential 1099 MISC tax forms and place your order timely, so the forms are delivered by 12/31. Give us a call @ 800-216-0763, we can help you with your order and answer any questions you may have.
We sell 1099 MISC and 1096 tax forms for your vendors in packages that can be purchased in increments of 10 compatible with QuickBooks®. The additional cost when you increase your order by 10 forms is nominal, so be sure to order enough to cover all potential 1099 MISC vendors. Each package comes with 3 1096 transmittal forms. You can add additional 1096 forms to your order for 25 cents each.
Early in January, you will want to print from QuickBooks® the 1099 MISC year-end tax forms. They are due by 1/31 each year. However, if you can get the forms mailed to the vendors and hold off filing with the IRS for a few weeks, the vendors will have time to review their forms and alert you of any errors. Fixing 1099 before you submit to the IRS is so much easier than creating a corrected 1099.
We are available to answer any questions you might have about QuickBooks 1099 year-end tax forms.
Discounted QuickBooks 1099 tax forms!