How to Create and File 1099 Form in QuickBooks Desktop?

How to Create and File 1099 Form in QuickBooks Desktop

As a small business owner, streamlining your tax reporting process is crucial. Understanding how to manage and set up 1099 accounts in QuickBooks Desktop is essential for accurate and efficient financial reporting. In this detailed guide, we will cover all aspects of 1099 account setup, including mapping accounts to the appropriate forms, setting up 1099 employees, adjusting preferences, and utilizing QuickBooks Online for 1099 reporting.

By the end of this article, you will be equipped with the knowledge and confidence to effectively manage 1099 reporting in QuickBooks, ensuring compliance and accuracy in your tax filing. Let’s delve into the details of navigating and optimizing your 1099 reporting processes within the QuickBooks ecosystem.

Contents

What Is a 1099 Account in QuickBooks Desktop?

In QuickBooks Desktop, a 1099 account is used to track payments made to vendors and independent contractors, typically for services provided. It plays a critical role in accurate tax reporting by capturing all vendor transactions above the IRS-mandated threshold.

This feature simplifies the process of generating and submitting 1099 form in QuickBooks Desktop at the end of the tax year. By accurately categorizing vendor payments and adhering to tax regulations, businesses can avoid penalties and simplify their financial tracking.

These accounts serve as a comprehensive record of all payments made to vendors, fostering transparency and efficiency in managing financial transactions.

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    Create and file 1099 Form with QuickBooks Desktop

    To ensure compliance with the IRS, businesses that pay contractors through cash, check, or direct deposit must file 1099 form in QuickBooks Desktop. QuickBooks Desktop simplifies this process by leveraging existing account information to prepare 1099s. Here is a step-by-step process of how to create and file 1099s with QuickBooks Desktop. 

    Step 1: Update QuickBooks Desktop

    In order to accurately print your 1099-NEC and 1099-MISC forms, you must update your QuickBooks to the most recent version.

    Step 2: Create your 1099 Form in QuickBooks Desktop 

    QuickBooks Desktop:

    • Select Vendors, then select 1099 Forms and then select Print/E-file 1099 Forms.
    • Create a backup.
    • Select Get started for the specific 1099 form you need to create. If you need to create both 1099-NEC and 1099-MISC forms, repeat these steps for the other form.

    Note: There are changes to the 1099 forms and boxes, so choose your forms carefully. Most businesses will choose “Nonemployee compensation, Box 1” on the 1099-NEC form. However, consult with your accountant if you believe you may have made other types of payments.

    • If you’re filing for New Jersey or Wisconsin, there are special rules for boxes 16 and 17 on 1099 forms filed in these states. Refer to the “File your state 1099 forms” section for more information.
    • Select vendors who require a 1099 form and click “Continue.”
    • Verify the accuracy of the vendor information. Double-click on a section to edit it if necessary. Then, click “Continue.”
    • Map the vendor payment accounts. From the “Apply payments to this 1099 box” drop-down menu, select the appropriate account. If any boxes are grayed out, they are mapped to the other 1099 form. You can only map accounts to one 1099 form. Once you are finished, click “Continue.”
    • Review your payment information for exclusions. For more details on what can be excluded, see “What payments are excluded from a 1099-NEC and 1099-MISC?” Click “View Included Payments” or “View Excluded Payments” to see detailed reports. Then, click “Continue.”
    • Review the vendors and amounts you plan to report. Click “Continue.”
    • Choose whether to print the 1099s or e-file them. If you choose to e-file your 1099s, follow the steps provided.

    QuickBooks Desktop for Mac:

    1. Create a backup of your data.
    2. Navigate to Vendors > 1099 Forms > Print or E-file 1099/1096.
    3. Select “Get started on 1099-NECs” or “Get Started on 1099-MISCs” for the form you want to create.
      • If you need to create both forms, repeat these steps for the other one.
      • Important: Choose your forms carefully as there have been changes to the 1099 forms and boxes.
      • Most businesses will choose “Nonemployee compensation, Box 1 on the 1099-NEC,” but consult with your accountant if you think you may have made other types of payments.
      • Special rules apply for boxes 16 and 17 on 1099 forms filed in New Jersey or Wisconsin. See instructions for filing your state 1099 forms.
    4. Select the vendors that need a 1099 form and verify that their information is correct.
      • Double-click on any incorrect information to edit it.
    5. Map the vendor payment accounts.
      • Select the account you want to link the payment to from the Account drop-down.
      • Any grayed-out boxes are mapped to the other 1099 form. Each account can only be mapped to one 1099 form.
    6. Review your included and excluded payments.
      • See “What payments are excluded from a 1099-NEC and 1099-MISC?” for more information on what can be excluded.
    7. View detailed reports by selecting “View Included Payments” or “View Excluded Payments”.
    8. Review the vendors and amounts you’re going to report.
    9. Choose whether to print 1099s or e-file.
      • If you choose to e-file, follow the steps provided.

    Step 3: Import your data into Tax1099

    After preparing your 1099s in QuickBooks, follow the on-screen steps by selecting the E-file button to import your data into your Tax1099 account.

    For more assistance, consult the Tax1099 articles about importing using either the Web Connector or the Plugin.

    Step 4: E-file your 1099s in Tax 1099

    1. Select the vendor name or the Edit button to edit vendor or box information.
    2. Enter state information under the appropriate state boxes, if necessary.
    3. Select the vendors to upload to e-file and click Next.
    4. Select the vendors to send copies to, and choose the delivery method.
    5. Choose the states to file with, if necessary, and click Next or Calculate Tax1099.com Fee.
    6. Enter your payment information and click Pay & Submit to e-File.
    7. Repeat the steps for 1099-NEC and 1099-MISC if you need both forms.
      Note: Changes made in Tax1099 will not flow back to your QuickBooks company file. There is an additional fee if USPS mail is selected.

    Step 5: Check your filing status

    Once you have successfully submitted your 1099s to the IRS, revisit your account to check the processing status of your submitted forms.

    Also Read: Quickbooks Paystubs

    How to Create and file 1099 Form With QuickBooks Contractor Payments if You Use QuickBooks Desktop?

    If you have QuickBooks Desktop in QuickBooks Contractor Payments, you can learn how to prepare and file your federal 1099-MISC and 1099-NEC forms.

    QuickBooks Contractor Payments provides a time-saving feature that helps you create your 1099s using the information already stored in QuickBooks Desktop. This service is particularly beneficial if you have straightforward 1099 forms to file, such as the 1099-NEC. However, it’s important to note that QuickBooks Contractor Payments currently only supports two payment types.

    To generate and submit your 1099s, follow the steps outlined below.

    Step 1: Make a list of all 1099 contractors and payments from QuickBooks Desktop 

    To gather information about 1099 Contractors and payments, you can use two reports in QuickBooks Desktop: 1099 Summary and 1099 Detail. Here’s how to access these reports:

    1. Open your QuickBooks Desktop company file.
    2. Select “Vendors & Payables” under “Reports.”
    3. Choose either “1099 Summary” or “1099 Detail.”
    4. Specify the correct date range for your 1099s under “Dates.”

    The reports will display the contractors who qualify for 1099s. If you find missing contractors or incorrect amounts, refer to the article “Fix missing contractors or wrong amounts on 1099s” for troubleshooting steps.

    Using these reports, you can review your 1099 information, filter by vendors, accounts, or thresholds, and obtain detailed information about each check paid to vendors.

    Step 2: Add your contractors and payments to QuickBooks Contractor Payments

    1. Sign up for QuickBooks Contractor Payments:
      • Sign up for QuickBooks Contractor Payments (without QuickBooks Online) if you haven’t already.
    2. Add Your Contractors:
      • Go to QuickBooks Contractor Payments, then Contractors.
      • Select “Add a contractor.”
      • Enter the contractor’s name and email address.
      • If you want the contractor to fill out their information, select the “Email this contractor” checkbox.
      • Select “Add contractor.”
      • Wait for the contractor to fill out their information if you send an email.
      • If you didn’t choose to send an email, select “Add” next to “Personal details” or “Bank account” and enter the contractor’s information.
      • When finished, select “Save.”
    3. Add Your Contractor Payments:
      • Go to QuickBooks Contractor Payments, then Contractors.
      • You can add payments to contractors by selecting them.
      • Select the “Pay with direct deposit” dropdown, then select “Write check.”
      • Enter the payment information:
        • The total amount of payments you made to that contractor in the previous year should be entered.
        • In “Category,” select “Contractor Payment” or “Contractor Reimbursement.”
        • Enter a Pay date in 2022.
      • When finished, select “Save.”
    4. Repeat:
      • Repeat for all contractors you paid.

    To add multiple payments simultaneously:

    1. Navigate to QuickBooks Contractor Payments:
      • Select “Contractors” from the menu, then choose “Overview.”
    2. Choose “Record Payments”:
    3. Select the Contractors:
      • Select the contractors for whom you need to add payments.
    4. Enter Payment Information for Each Contractor:
      • Enter the total payment amount for the year for each contractor.
      • Choose either “Contractor Payment” or “Contractor Reimbursement” from the “Category” drop-down menu.
      • Enter a pay date within the year 2022.
    5. Finalize the process:
      • After entering the details for each contractor, click “Record Payment” twice to finalize the process.

    Step 3: Create your 1099s

    1. Navigate to the “Contractor Payments” section in QuickBooks.
    2. Select “Contractors” and then “Contractors” again.
    3. Choose “Prepare 1099s.”
    4. Ensure your company information, including the name, email, address, and tax ID, matches what’s on official tax documents from the IRS. Edit any incorrect information.
    5. Click “Confirm info and get started.”
    6. Select and confirm the accounts used for 1099 expenses or payments, then click “Add.”
    7. For each added account, mark the 1099-NEC or 1099-MISC boxes that represent the types of payments made to your contractors. Click “Next.”
    8. On the “Tracked for 1099” tab, tick the checkbox next to each contractor who should receive a 1099. Verify and edit their personal information and email addresses.
    9. If a contractor is missing, switch to the “Not tracked for 1099” tab. Click “Add to tracked list” to move the contractor to the “Tracked for 1099” tab, then click “Back.”
    10. Review the “Reportable total amount” for each selected contractor, then click “Next.”
    11. Click “Preview” to view each 1099 and verify the amounts in each box. Click “Continue to 1099-MISCs” to review the 1099-MISC forms. Click “Next.”
    12. Choose “Continue to E-File” to electronically file your 1099s, or “I’ll print and mail” to print and mail the forms yourself.

    Step 4: E-File your 1099s 

    Once you have prepared and verified the accuracy of your 1099 information, you can proceed with e-filing.

    1. After preparing your 1099s, choose the E-File option and review them.
    2. Follow the on-screen instructions to complete your 1099 e-filing. During this process, you’ll also be able to review each contractor’s 1099.

    Note: If prompted, select the delivery method for your contractors’ copies. You already provided online access to their 1099s when you added them to QuickBooks if this option is not available. If an email address is incorrect, you’ll need to update it and then go through the 1099 e-file process again.

    Please note that the paper version of Copy A of Form 1099 is for your records only. You should not print or mail it to the IRS.

    Step 5: Check your filing status

    Once you submit your 1099s to the IRS using the steps above, we will send you an email with your filing status. Additionally, you can check your filing status at any time.

    1. Access QuickBooks Contractor Payments.
    2. Select “1099 filings” from the menu.
    3. Under “Filing status,” review the status of your e-filing. Here are the possible statuses and their meanings:
    • Not Submitted: You have not yet submitted Form 1099-NEC or 1099-MISC to the IRS electronically. You can still make changes to this form.
    • Submitted: You have successfully e-filed the form with the IRS. Please note that if you need to make changes, you may need to file an amendment manually. Refer to these IRS instructions and form for more information.

    Also Read: Quickbooks Online vs Desktop

    How to Set Up a 1099 Account in QuickBooks Desktop?

    To set up a 1099 account in QuickBooks Desktop, you must create a new account, define vendor information, and assign the account to the vendor. This will allow for accurate tracking and reporting of payments.

    Creating a New Account for 1099 Tracking:

    1. Access the Chart of Accounts in QuickBooks Desktop.
    2. Add a new account by selecting the option.
    3. Categorize the account as an expense account.
    4. Provide a clear name for easy identification.
    5. Enable the “Track payments for 1099” option to ensure that all transactions related to this account are appropriately tagged for 1099 reporting.
    6. For seamless integration with tax filing processes, configure the tax line mapping to match the specific 1099 categories.

    The 1099 tracking process within QuickBooks Desktop will be streamlined and accurate if these settings and customizations are verified. 

    Vendor Information Setup for 1099 Reporting in QuickBooks Desktop:

    Accurate vendor information setup is critical for 1099 reporting in QuickBooks Desktop. For seamless payment tracking and tax form generation, it ensures accurate tax details and 1099 preferences. This process is essential for maintaining tax compliance and financial records.

    Businesses can accurately report payments made to vendors by configuring vendor details specifically for 1099 reporting. Correct 1099 preferences setup enables efficient organization and generation of 1099 form in QuickBooks Desktop during tax season.

    Proper vendor management in this regard helps businesses avoid penalties and errors in their tax filing, contributing to overall financial management and regulatory compliance.

    Managing Vendor Accounts for Accurate 1099 Reporting in QuickBooks Desktop

    In QuickBooks Desktop, assigning the 1099 account to each vendor ensures seamless tracking of payments and transactions related to 1099 tax reporting. This integration connects vendor payments with financial records, enabling businesses to maintain accurate records of all vendor transactions.

    By associating each vendor’s account with the 1099 form, the tax reporting process is simplified. This ensures that the correct information is included in annual tax filings, maintaining compliance with tax regulations and reducing the risk of errors. This integration also helps manage vendor payments efficiently and enhances overall financial transparency.

    Assigning the 1099 account to vendors in QuickBooks Desktop provides the following benefits:

    • Streamlined 1099 form generation
    • Financial tracking and vendor payments are seamlessly integrated
    • Accurate records of all transactions with vendors
    • Simplified tax reporting process
    • Improved compliance with tax regulations
    • Efficient management of vendor payments
    • Comprehensive financial transparency

    How to Map 1099 Accounts in QuickBooks Desktop?

    To accurately report taxes, 1099 accounts must be mapped in QuickBooks Desktop. This can be done by accessing the Chart of Accounts, choosing the appropriate account, and mapping it to the 1099-MISC form.

    Once you have located the Chart of Accounts, you can click on the desired account, select the “Edit” option, and then choose the “Tax Settings” tab. From there, you can assign the 1099-MISC tax form and specify the appropriate box on the form where the income should be reported.

    Accounts subject to 1099 reporting must be correctly mapped to their corresponding tax forms. This will help you stay compliant and accurately track income for tax purposes.

    How to Set Up a 1099 Employee in QuickBooks?

    • Adding a 1099 Employee to QuickBooks Desktop

    1. Adding a 1099 employee in QuickBooks Desktop can be a seamless process by following these steps.
    2. Create a vendor profile for the employee to set up reporting parameters.
    • Configuring Tax Settings

    1. Ensure accurate tax settings reflect the employee’s 1099 contractor status.
    2. Specify the tax identification number (TIN) or social security number and confirm 1099 reporting eligibility.
    • Tracking Payments

    1. Implement a meticulous tracking system for payments made to the employee.
    2. This organization helps streamline financial records and ensures tax compliance.
    • Comprehensive Employee Management

    1. QuickBooks Desktop’s approach to employee management streamlines 1099 reporting.
    2. It supports efficient tax regulation adherence and smooth financial processing.

    Adding the employee as vendor

    Setting up a 1099 employee as a vendor in QuickBooks Desktop is essential for accurate tax reporting and seamless generation of 1099 form in QuickBooks Desktop. It enables proper categorization of payments, simplifies tax compliance, and facilitates effective employee management and financial tracking.

    This straightforward process ensures that all necessary tax information is accounted for, minimizing the risk of errors and penalties associated with misclassifying workers. By creating a vendor profile for the employee, you gain the ability to accurately track and report payments, maintaining the integrity of your financial records and streamlining your overall financial management.

    Setting Up the Employee for 1099 Reporting

    To ensure accurate reporting of payments and transactions on 1099 form in QuickBooks Desktop, configuring employees for 1099 reporting in QuickBooks Desktop necessitates specifying relevant tax details and preferences. This process includes entering the employee’s Social Security number, tax identification number or employer identification number, and selecting the appropriate tax category. Setting the preference to include the employee in 1099 forms is essential for accurate financial reporting. By meticulously following these steps, compliance with IRS regulations is ensured, and smooth tax form preparation is facilitated, reducing the risk of errors and potential penalties.

    How to Map 1099 Accounts in QuickBooks Online?

    Using QuickBooks Online, mapping 1099 accounts involves finding the Chart of Accounts, selecting the relevant account, and connecting it to the 1099-MISC form.

    Within the Chart of Accounts, you can search for the specific account you need to map by entering its name in the search bar. Once found, click on the account and select “Edit” to assign it to the corresponding 1099-MISC reporting category.

    Accurate categorization of each account is crucial for reflecting appropriate income or expenses in tax filings. By meticulously mapping your 1099 accounts, you can streamline the tax reporting process and adhere to IRS regulations.

    Also Read: Convert QuickBooks Desktop to Online

    How to Make a 1099 Vendor in QuickBooks Online?

    To establish a 1099 vendor in QuickBooks, one must provide vendor information. This involves adding their name, address, and tax identification number in the Vendor Center. Additionally, it’s essential to indicate that the vendor is eligible for 1099 reporting, which ensures compliance with tax regulations.

    Categorization of payments made to the vendor is crucial to ensure accurate 1099 form in QuickBooks Desktop generation. Payments can be categorized based on their nature, such as rent, royalties, or nonemployee compensation. This organization aids in the efficient generation of 1099 form in QuickBooks Desktop at the end of the fiscal year, which is a requirement for reporting vendor payments.

    How to Change 1099 Preferences in QuickBooks Desktop?

    To customize 1099 preferences in QuickBooks Online, follow these steps:

    1. Access the Preference Settings: Log into your QuickBooks Online account, navigate to the ‘Taxes’ tab, select ‘Sales Tax,’ and then click on ‘Sales Tax Settings.’
    2. Select the ‘1099’ Option: Once in the Sales Tax Settings, click on the ‘1099’ option to reveal the customization preferences.
    3. Customize 1099 Settings: Modify the settings according to your business requirements. You can customize tracking categories for form 1099, company details, and vendor details.
    4. Save Changes: After making the necessary adjustments, be sure to save your changes to update the 1099 preferences and complete the setup process.

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