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Vendor 1099 FAQs
Summary: Clients & Profits automates a typically time-consuming and error-prone annual ritual -- printing year-end 1099 reports and tax forms for vendor payments. You'll find step-by-step instructions for tracking and reporting vendor 1099 payments in the Job Costing chapter in your Clients & Profits Visual Feature Guide. You'll find answers to commonly-asked questions about 1099s below.
Q. Are the amounts on the 1099 reports coming from A/P, the checkbook, or the general ledger? How do I add or remove checks for a recipient on their 1099 form?
The 1099 amounts are based exclusively on posted checks. Purchases
paid for by check are totaled by payee on 1099 reports and
forms. In particular, only checks with the "Include on year-end 1099 report" checkbox selected are included in the total for the 1099 forms and in the reportable payments section on the 1099 preview report. When creating a check in C&P, if the vendor is set to include their checks on 1099s then the 1099 checkbox will be selected automatically when creating checks for this vendor. However, if the vendor is set to include their checks on 1099s after checks have already been created for this vendor, then you'll need to find these checks and manually mark them to be included on 1099s. This is how to adjust the amount to be included on the 1099 forms, by selecting-deselecting which checks are included in the 1099 total via the "Include on year-end 1099 report" checkbox on each check.
Q. Do we have to print 1099 forms?
No, they don't have to be printed from Clients & Profits. But you are required to report payments over $600 to the IRS. If you don't print them from C&P, you'll need to type them up manually. Since 1099s are compiled automatically from the checks you've written all year, it's much faster to print forms from Clients & Profits.
Q. I've written overhead expense checks to freelancers who aren't set up as vendors. Will they still get a 1099 form?
No, because you would not have been able to select the "Include on year-end 1099 report" checkbox until a vendor record was created for this freelancer and their vendor code was added to this check. Overhead expense and job ticket cost checks now require a vendor code when selecting the "Include on year-end 1099 report" checkbox. This is due to new 1099 features, such as the DBA, which is stored in the vendor record, or now being able to print a 1099 for a single vendor.
Q. Do I use the 1099 preview report to audit the 1099 amounts before printing the forms?
Yes, the 1099 preview report helps you verify that the year's checks are correctly categorized as "Reportable" or "Exempt." The report is divided into two sections: 1099 reportable payments and 1099 exempt payments. Clients & Profits will not print a 1099 form for a payee in the "Reportable" section that is under the IRS limit (currently $600). As well, a 1099 form will not print for any payee in the "Exempt" section, regardless of the amount of the total payments. Note that the report will list every check within the date range you specified on the report. This is very helpful because it allows you to confirm if the checks in this range were properly marked for 1099 or not. This is driven by the "Include on year-end 1099 report" checkbox on each individual check. Be sure the checks are categorized properly before printing 1099 forms. The 1099 status on a check can be changed by unposting the check, then clicking the Edit button on the check and marking the 1099 checkbox accordingly.
The 1099 "preview" is a good report to send to your CPA if they prepare your 1099 forms.
Q. Where do I edit the recipient's address that prints on the 1099 forms and preview report?
The address that prints on the 1099 forms comes from the payee's vendor account under Setup > Vendors. However, the address that prints on the 1099 preview report comes from the last check for each payee in the selected date range for this report. As a check is added the address in the payee's vendor account is copied to the check itself. The check's payee address can be edited without having to unpost the check.
Q. Is there a difference between a vendor address in C&P and the address area on the 1099 form?
Yes. The vendor address on the actual 1099 form is shorter than addresses in Clients & Profits. For this reason, avoid using the last (3rd) address line in the vendor account. Put the zip code on the same line as the city and state. On job cost and overhead checks when you type an address on a check, don’t use the 3rd address line. Put the zip code on the same line as the city and state.
Q. Where do I edit the recipient's taxpayer ID number that prints on the 1099 forms and preview report?
The taxpayer ID that prints on both the 1099 forms and preview report comes from the first check for each payee in the selected date range when printing the forms and preview report. To edit this value, click the Edit button on the check, then uncheck and recheck the "Include on year-end 1099 report" checkbox. This will copy the taxpayer ID from the vendor account into this field, then allow you to edit the value if necessary.
Q. Why would I use the 1099 summary report?
The 1099 summary report assists you in preparing the IRS transmittal form for 1099s. It counts the number of 1099 forms printed as well as the total dollar amount. You can also compare the preview and summary reports for your own auditing purposes.
Q. I have checks for rent, how do I make the amount print in the Rents box on the 1099 form?
Find this vendor under Setup > Vendors, then select the "1099 - Rents" checkbox. Clients & Profits will then print the amount for this vendor in the "Rents" box instead of in the "Nonemployee compensation" box. If you have other types of reportable payments that need to print in a different box other than "Rents" or "Nonemployee compensation", you will need to manually type these 1099s or customize the 1099 form.
Q. Can 1099 forms be printed on an ink-jet printer?
Yes. While Clients & Profits can print 1099 forms on any ink-jet or laser printer, there may be alignment problems depending on your printer's capabilities, installed fonts, and operating system. It's a matter of trial-and-error until the forms are printed successfully. (You might even have to try several printers.)
Q. Where do I get the blank 1099 forms?
Clients & Profits uses standard one-part, laser-compatible 1099 forms. They are available from check printers or many office supply stores. To ensure compatibility with Clients & Profits, order your 1099 forms here.
Q. How do I get copies of the 1099 forms?
You can either print the 1099 forms over again on plain paper, or make photocopies of the printed forms.
Q. Should I print the 1099 forms to the screen first?
No. If you print the 1099's to the screen first and then to the printer, the top form is skipped and margins are misaligned. DO NOT print 1099's to the screen first -- print the forms directly to the printer.
Q. How do I change the margins on my 1099 forms when printing?
The 1099 forms are designed especially for laser printers, and normally should work without adjustments. If not, the margins can be adjusted by clicking "Change Margins" in the print 1099 reports window. This works exactly like changing the margins when printing checks. Print to plain paper during this trial-and-error process overlaying the test paper on the top of the 1099 forms until the margins are right.
Q. I adjusted the margins on my 1099 forms but they still are not properly aligned. What do I do?
Alignment can be tricky with the wide variation in computers and printers available today. All of these variables can cause the spacing to differ enough to throw off the forms. If you have access to another printer, try it next. (Often there will be a slight variation between printers that is just enough to do the trick.) Or, try using the same printer from a different computer. It may be a matter of trial-and-error to make the forms work.
Q. I've tried everything, but still can't get the forms to align properly! What can I do next?
If all else fails, the last option is to modify the 1099 form in Clients & Profits. Choose Setup > Customize Reports. In the Report Name column, select Y1099_Form if you’re working from a Mac or Y1099_Form_PC if you’re working from a PC. Click Customize. Click Yes to the prompt. You can now click on any field in the form and move it. Click Save when finished. Print to plain paper until it matches the IRS form. Remember: You are only changing the settings of the computer at which you are working when customizing a report like this.
Q. IRS regulations require the DBA to print under the Recipient's name. How is this done?
Find this vendor under Setup > Vendors. Then click on the Addresses link and enter the DBA in the optional DBA field under the 1099 info section in this window. Include the letters "DBA" in the field if you want those letters to print. C&P will then print this value directly below the Recipient's name on the 1099 forms. Note that the DBA will not print on the 1099 preview report, only on the forms. If the DBA value is not printing on the 1099 form, make sure the checks for this recipient all have a vendor code. To add a vendor code, unpost the check, then click the Edit button and add a vendor code accordingly. This can be done for overhead and job cost checks. Vendor payment checks should always have a vendor code and don't allow editing of the vendor code field on an unposted checks.
Q. I need to reprint a 1099 for a single recipient. How do I do this?
When printing the 1099 forms enter this single vendor code in the "and for vendor" field instead of the default value of ALL.
Q. When I print my 1099's, I get two 1099's for the same vendor, each with slightly different recipient names. Why is this happening and how do I fix this?
Currently, C&P uses the payee name on checks as the recipient name on the 1099 forms. If there are checks for the same vendor with slightly different payee spellings (including case differences), C&P will break these out as separated 1099's. To fix this, you'll need to edit each check with the incorrect payee name to exactly match the payee name on the checks with the correct payee name. This is done by unposting and editing the check. Either tab off the vendor code to copy the new vendor name to the payee field (overhead and job cost checks) or edit the payee field directly (vendor payment checks). This problem normally happens when a vendor slightly changes their name during the year. This name change is reflected in the vendor record, impacting checks created after the change, but the prior checks for that year still have the old vendor name, which in turn print out on their own 1099 until the payee name on these checks are manually edited to match the new name.
Q. A vendor submitted an invoice where part of the invoice should not be included as a 1099 expense, how do I remove this amount form the 1099 form?
You can not break out a portion of a check to be excluded from the 1099 total for a vendor. This is common where you may be reimbursing a vendor for goods they bought on your behalf that are not a reportable 1099 service expense. If you can, write two separate checks to this vendor, one for the services portion of the invoice and one for the reimbursement of the goods. Make a point to uncheck the "Include on year end 1099 report" checkbox on the reimbursement check. If you are not able to write two checks, then you'll need to manually create the 1099 for this vendor.
Q. We paid a 1099 reportable expense via a credit card, can C&P account for this on the proprietor's 1099 form?
No, C&P generates it's 1099 amounts from checks alone. Even partially paying the credit card via a check for only the 1099 expenses won't work, because the vendor being paid is the credit card company, not the proprietor that provided the service. You'll need to manually create this 1099 form.
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