As tax season approaches, it's important to prepare for the end of the year. You may dread 1099 reporting, a time-consuming task for business owners and their accounting departments during tax season. However, using Sage Intacct to manage your 1099 reporting and its e-file capabilities will help ensure the forms' accuracy and provide you with peace of mind as you file. Let's start by reviewing the steps you should take throughout the year to help streamline and prepare you for the filing process.
Step 1:
As new vendors or employees are added, be sure you have created and set up a vendor type for the 1099 contractors within the additional information tab of each 1099 vendor. When dealing with employees, you will set up the 1099 information within the time and expense module on the additional tab. Remember to ensure the employee's 1099 name is entered correctly. If you entered a 1099 name that is different than the Print as name, both fields will print on the 1099 form.
Step 2:
Create a 1099 vendor contact verification report. This report created using the customer reports feature will be very useful when comparing the 1099 contact records to the primary contact record assigned or validating that contact information is entered correctly. If you need help with how to create this report, please reach out to a member of the Tablespoon team for assistance.
Step 3:
Remove any duplicate 1099 vendors found. In the event you might have created two vendor records for the same vendor, you will want to inactivate one record and keep the other record active. When you do this, remember to move any 1099-eligible payments to the vendor record you left marked as active.
IMPORTANT NOTE: Only submit one 1099 report for the vendor record you decide to keep. You must include any payments made to the duplicate vendor as Initial Open Values.
Step 4:
Remember to order new tax forms. These are updated yearly, so you will want to ensure you have ordered the latest forms for the upcoming tax season. You can find Sage Intacct-approved forms at intacct.dsa-direct.com. These forms are the only ones Sage will support, as they have been set to be perfectly aligned for printing.
Step 5:
(Skip if this is NOT your first 1099 season on Sage Intacct)
If this is your first 1099 season using Sage Intacct Core Financials, you will want to have ensured all historical year-to-date amounts have been captured for each 1099 vendor or employee. Opening balances, or historical year-to-date (YTD) amounts are the 1099 amounts you had in your last system before you started tracking in Sage Intacct. If you set up your books with a start date after January 1, you probably need to set up starting YTD balances for each 1099 vendor or employee. This amount is added to the total amount of the existing transactions tagged for 1099 treatment and is included in 1099 reportable totals.
IMPORTANT NOTE: You will need to know if you are to Enter opening balances at the top level or entity level. This will be decided based on whether your company is enabled to Issue a separate 1099 per entity:
If this option is selected, you can enter historical YTD amounts at either the top level or entity level. Vendors and employees within entities are assigned entity-specific initial amounts.
If you are not configured to issue a separate 1099 per entity, enter initial amounts for all vendor employees at the top level.
Only enter the calendar YTD 1099 balance for a vendor or employee. This amount can be different from the entire amount paid year-to-date if your company is on a fiscal year that doesn't correspond with the calendar year, back out payments made to that vendor or employee during the prior calendar year. In addition, some of a vendor's transactions may not have been 1099 entries. Should you have any of these, they will have the 1099 box unchecked for those entries.
1099 opening balances can be entered one of two different ways: manually, or you may import the balances using Sage Intacct's 1099 import templates.
Following the above steps will help ensure you are ready for the upcoming 1099 reporting season each year. You can use Sage Intacct to run customized reports throughout the year highlighting 1099 accounts, helping to ensure the correct 1099 form type and other data are accurate and ready for printing and submission to the IRS before the start of the hectic tax season.
Submitting 1099 forms to the IRS is straightforward and easy!
As you begin to process the 1099 forms for your organization, you will also be preparing copies that must be sent to the IRS. If your organization works with less than 250 vendors who require 1099 forms, the IRS guidelines allow your organization to mail these forms to the IRS. You will be able to print the forms directly from within Sage Intacct.
The Taxpayer First Act of 2019, enacted July 1, 2019, authorized the Department of the Treasury and the IRS to issue regulations that reduce the 250-return requirement for 2023 tax returns. The e-file threshold of 10 is effective for returns required to be filed on or after January 1, 2024. Beginning in 2024 for information returns filed for tax year 2023, including Forms 1099-MISC and 1099-NEC, employers will have to file electronically if they file at least 10 information returns in a year. It’s not 10 of a specific form, it’s a combination of all the information returns filed under an Employer Identification Number. So, if you have Forms W-2, Forms 1099-MISC, 1099-NEC, 1099-R, or any other information returns an employer may be filing, if you have over 10 combined returns, you will have to file electronically. Sage Intacct allows you to prepare and send the e-file batch directly from Sage Intacct to TaxBandits to submit the forms to the IRS. There will be an additional per-form charge from TaxBandits.
While as of this writing the IRS has not set the start date to begin to accept 1099 e-filing transmissions for the 2023 tax year, we estimate January 22, 2024, as the anticipated start date. If you want to learn more about managing your company's reporting or how to set up and use e-filing, schedule a call with one of our Tablespoon experts.
