R365 offers the ability to track 1099-MISC, 1099-NEC, and 1099-INT transactions by Vendor and organize 1099 processing by Legal Entity or Common Payer. The advanced setup and functionality of 1099 information in R365 allows more accurate tracking of Vendor information for IRS reporting.
This article reviews the following:
- 1099 Setup
- Vendor Record
- Legal Entity Record
- Updating Individual Transactions
- Updating Multiple Transactions
- Transactions and Bank Expense Grids
- 1099/1096 Reports and Forms
Ensure that the correct 1099 information is entered on the necessary Vendor and Legal Entity records.
All Vendors subject to 1099 reporting will need to have tax information entered and saved on the '1099' tab of their Vendor records. This information will then appear on AP Invoices and Credit Memos when this Vendor is selected.
1) Name - This is the common name that the Vendor is referred to within your Organization. This will be auto-populated based on the name written in the 'General' tab and will be displayed as read-only
2) Check Name - This is the name used to print on a check. This will be auto-populated based on the name written in the 'General' tab and will be displayed as read-only
3) Exclude when processing 1099s - When checked, this will not include the Vendor during 1099 processing
4) Company - If the 1099 Vendor Type is a company, select this option. When selected, the following fields will appear:
- 1099 Company Name - The name that matches the Tax ID - EIN
- Tax ID - EIN - This Tax ID for the Vendor, which may be the EIN (Employer Identification Number). The formatting for this field is: ##-#######
5) Individual - If the 1099 Vendor Type is an individual, select this option. When selected the following fields will appear:
- 1099 Name - The name that matches the SSN/TIN
- Tax ID - SSN/TIN- The Tax ID for the individual, which is formatted as: ###-##-####
- Note: All but the last four digits will be masked for security purposes
Transaction Entry Options
6) Active - These checkboxes mark the corresponding form as 'Active', or in use, for the Vendor
- Note: Marking a form as 'Inactive' will update all Unapproved transactions that use this form and box to the next defaulted form/box. If no other forms are active, the 1099 information will be removed from those transactions
7) Default - The default form for the Vendor, which will appear on the data entry screen (AP Transactions). Only one form can be marked as the default form, and if the default form is marked as 'Inactive', then the first active form will be set as the default
- Note: The default form can be updated at any time
8) Form - The available 1099 forms for the Vendor, which include:
- 1099-MISC - Miscellaneous Income
- 1099-NEC - Nonemployee Compensation
- 1099-INT - Interest Income
9) Box - A default box selection will need to be made for the form(s) selected. Options include:
- 1099-MISC- Interest Income
- 1 - Rents
- 2 - Royalties
- 3 - Other Income
- 4 - Federal Tax Withheld
- 5 - Fishing Boat Proceeds
- 6 - Medical Payments
- 7 - Direct Sales
- 8 - Substitute Payments
- 9 - Crop Insurance Proceeds
- 10 - Proceeds to an Attorney
- 12 - Section 409A Deferrals
- 13 - Excess Golden Parachute
- 14 - Non qualified Deferral Comp
- 15 - State Tax Withheld
- Pre-2020 Box 7: Nonemployee Compensation
- Pre-2020 Box 9: Direct Sales
- Pre-2020 Box 10: Crop Insurance Proceeds
- Pre-2020 Box 14: Gross Proceeds to Attorney
- 1099-NEC- Miscellaneous Income
1 - Nonemployee Compensation
4 - Federal Tax Withheld
5 - State Tax Withheld
- 1099-INT- Nonemployee Compensation
1 - Interest Income
2 - Early Withdrawal Penalty
3 - Interest on US Bonds
4 - Federal Tax Withheld
5 - Investment Expenses
6 - Foreign Tax Paid
8 - Tax-Exempt Interest
9 - Activity Bond Interest
10 - Market Discount
11 - Bond Premium
12 - Bond Premium Treasury
13 - Bond Premium Tax Exempt
10) Allow Box Override - When checked, this allows the User to select a box other than the one selected on the Vendor record when entering transactions
Ensure that all information is entered correctly and saved before closing the record.
Legal Entity Record
All Legal Entities can be processed for 1099s, but if your Organization wants to aggregate multiple Legal Entities into a single reporting Legal Entity, this can be done by selecting a Common Payer.
To setup a Common Payer, select the desired Legal Entity to serve as the Common Payer, or the single reporting Legal Entity, by opening its corresponding record, clicking the 'This Legal Entity is a Common Payer' checkbox, and saving the record.
Then, open all other Legal Entity records that will be processed through the Common Payer, select the Common Payer's name in the 'Report 1099s Through' drop-down selector, and then save the record. Repeat for all necessary Legal Entities.
Updating Individual Transactions
For Vendors that have more than one form set as 'Active' on their Vendor record, their '1099 Form' field can be easily updated on the transaction record of unapproved transactions.
On the transaction, select the desired Vendor. This will auto-populate the '1099 Form' and '1099 Box' fields to the default form and box selected on the Vendor record. Clicking the drop-down selector on the '1099 Form' field will display all available 1099 Forms available for that Vendor. Select the desired form and then update the '1099 Box' field if needed.
- Note: This box will only be editable if the 'Allow Box Override' checkbox next to the corresponding 1099 Form is checked on the Vendor record.
Updating Multiple Transactions
Multiple transactions can have their 1099 information updated in bulk from both the AP Transactions and Bank Transactions lists. To update both approved and unapproved AP Invoices and/or Credit Memos, Users will need one of the following Security Roles:
- Full Access (Primary)
- Accounting Manager (Primary)
- Edit 1099 Information (Secondary)
To filter for 1099 transactions, open the desired list from the left pane of the Accounting module and then select the '1099 Transactions' Saved View from the view selector in the top, left corner above the grid.
In the list, select the desired Approved and/or Unapproved transactions and then click the 'Edit Selected' drop-down menu above the grid. From the menu, click 'Update 1099' to open the 'Update Transaction(s)' modal.
From this modal, the 1099 Form, 1099 Box, and/or the 1099 Amounts set on the transaction(s) can be updated. Once the necessary fields are updated, click 'Ok' to make the selected changes.
A confirmation modal will appear confirming the amount of transactions that were updated. If one or more of the selected transactions did not have the selected 1099 Form and/or 1099 Box marked as 'Active' on their corresponding Vendor record, then those transactions will not be updated.
To be able to make the desired changes to these transactions, navigate back to that Vendor record and mark the necessary form and box as 'Active' on the '1099' tab. Ensure to save the record, and then either update the transaction(s) individually or in bulk from the AP Transactions or Bank Transactions list.
1099/1096 Reports and Forms
The 1099 Report is generated not from the 1099 Box on the Vendor record but the 1099 Box and the Payment Apply Date on each AP transaction. This report is calculated by summing the 1099 Amount on each AP transaction that was processed during the year for each Vendor. When the Payment Apply Date for a transaction occurs, the transaction will then show up in the 1099 Report.
To view both 1099 and 1096 Forms and Reports, view the links below: