Sherlock, the 1099 Detective

There are many types of 1099 forms that are issued for a wide variety of financial transactions. The government requires the filing of these forms in an effort to make sure that all income is reported by all taxpayers.

In particular, the IRS requires that your business prepare and file Form 1099-MISC for payments of services to individuals and unincorporated businesses of $600 or more in a calendar year. The due date for sending out these forms is January 31st of the following year in which payments are made. A copy of the 1099s, along with a 1096 transmittal, is due February 28th. Failure to file can result in penalties assessed to your business.

Business owners get busy at year end so begin gathering the data for 1099 transactions now! QuickBooks® provides the ability to track all 1099-related payments and you can print the data on preprinted forms designed for your printer.

Start by activating the 1099 feature in QuickBooks and selecting the correct parameters that conform to IRS requirements.

1. From the Edit menu, choose Preferences.

2. Scroll to the bottom in the Preferences list and Select Tax:1099.

3. On the Company Preference Tab, select Yes to the question, Do you file 1099-MISC forms?

4. To map your accounts to boxes on Form 1099-MISC, click the link on the Company Preferences screen and complete the 1099 Wizard.

The following window is displayed that explains 1099 options with the accounts most commonly used for 1099 expenses.

Click the link "Show IRS 1099-Misc filing thresholds" to review and/or reset QuickBooks to the current IRS requirements.

Next, you will need to identify vendors that are to receive a 1099-MISC form.

1. From the Vendor Center, double-click on the vendor to be edited. The vendor record will be displayed.
2. Click on the Edit button.
3. Click on the Tax Settings tab.​

1. Enter the vendor Tax ID number.
2. Select "Vendor eligible for 1099" checkbox.
3. Click OK.

But what if you forget some of the vendors? The information on the 1099 Summary report (in the Reports menu under Vendors & Payables) should be checked carefully before the forms are printed. The report initially shows only vendors specified as 1099 vendors. To list all vendors in the report, regardless of their 1099 status, choose All Vendors from the drop-down list in the 1099 Options field. If a vendor appears on the resulting report and should have been on the original report, the vendor record must be updated with the missing information.​

If you began using QuickBooks midyear, 1099 adjustment entries may be necessary to enter amounts representing payments made to vendors prior to the QuickBooks start date.

1. From the Company menu, select Make General Journal Entries.
2. Set the date to be during the calendar year for which the 1099s are to be created.
3. On the first line of the detail area of the General Journal Entry window, enter "1099 adjustment entry" in the Memo field.
4. Tab to the second line.
5. Enter the appropriate 1099 account, the amount of the 1099 adjustment in the Debit column, and the vendor name in the Name field.
6. On the third line, credit the same expense account for the same amount and leave the Name field blank.
7. Repeat steps 5 and 6 for each additional 1099 vendor adjustment.
8. Record the transaction.

Having difficulty? Contact our office if you have any questions pertaining to QuickBooks. We'd be glad to help!