BTerrell Group Blog

Chances are you don’t give a great deal of thought to Form 1099. Not as famous as the W-2,
nor as infamous as the 1040, the humble 1099 is still worthy of respect – or at least accuracy. Intacct makes preparing 1099s a straightforward task, but like many things tax related, there are some subtleties and tips and tricks involved in getting it right. Here are six things to know about 1099s, to help you master the task and get on with it.

1. There’s more than one kind of 1099

Two dozen kinds in fact. To accommodate the various types of non-wage income such as interest (10999-INT), cancellation of debt (1099-C), and even payments by the Railroad Retirement Board (RRB-1099), the IRS came up with many variations on the 1099. But for our purposes, we’ll be working with the 1099-MISC, used to report the income paid to independent contractors. You use Form 1099-MISC to file an informational return of income other than wages. That’s the key point – other than wages. You do not produce 1099s for employees.  

2. Not all contractors need a 1099

In general, you’ll need to issue a 1099 to each individual you paid $600 or more in rent, services, prizes and awards, or other miscellaneous income payments during the tax year. Notice we said “individual?” That’s because you do not need to issue 1099s to corporations, only to unincorporated businesses, such as partnerships, limited liability companies, limited partnerships and estates.

3. History matters

You will set up your independent contractors as vendors in Intacct, and it requires just a simple check of the 1099 box to indicate that they are (potentially) 1099 worthy. Checking this box in the vendor record means that every invoice you record for this vendor counts toward their $600 1099 threshold. (Depending upon your system’s configuration, however, you can override the box for particular transactions.) Whenever you change the 1099 checkbox, Intacct offers you the option of updating the updating the 1099 status for line items in bills and adjustments linked to that vendor.

4. You can rewrite history

If you’re just getting started with Intacct, you can avail yourself of a handy CSV import to populate the vendor data from your prior system. If you have only a handful of vendors to update, it makes more sense to visit each vendor’s record manually and enter the pertinent data. Here are the steps:

• Go to Accounts Payable > Vendors.
• Click Edit beside the relevant vendor.
• In the Additional Information tab, click the Form 1099 link. The Form 1099 Information with Default Box page appears.
• Select the required form from the Form Name drop-down list.
• In Default 1099 Box field, select the box field to display the value.
• Use the fields below the default 1099 Box to enter values from a previous system, otherwise leave these fields blank.
• Save the Form 1099 Information with Default Box page, then save the Vendor Information page.
• In the pop-up, select Yes to automatically update the line items in bills and adjustments for the vendor, or select No to leave the transactions as is.

5. It’s not all that taxing

With a bit of preparation on your part, 1099 processing needn’t be a time-consuming or overly-complex task. With Intacct busy collecting and storing the required data all year long, come year-end you’ll need only print and review the 1099 report and then print your 1099s directly from Intacct. And don’t forget that other form that the IRS snuck in on us – the 1096 – a simple summary form you send only to the IRS along with their copies of the 1099 forms.

6. Deadlines and penalties

2016 filing deadlines for the 1099-MISC have changed. In the past, paper filings were due on February 28, and e-filers had until March 31. For the 2016 tax year, you must file with the IRS on or before January 31, 2017. This deadline applies for both paper and electronic filing. Missed deadlines can be costly, with penalties ranging from $50 to $530 per return.

Businesses get busy at this time of the year, and we’re here to help in any way we can. Contact us with your questions.

By BTerrell Group, Texas- based Intacct Partner