1099 Changes to Non-Employee Compensation Require You to Act Now
Talk of 1099s rarely inspires much thought, let alone action. This humble, routine IRS form typically only rises to our awareness once a year. However, this year is different. Your 1099s need your attention now — before Friday, November 13!
The current situation
The Department of Treasury has made a significant change in the way non-employee compensation payments are reported on the 1099 form. Previously, these payments were reported on Form 1099-MISC, Box 7. Beginning with the 2020 tax year, these payments are to be reported on Form 1099-NEC, Box 1.
Currently, you may have vendors for which non-employee compensation is being collected. Starting on November 13, 2020, with Sage Intacct 2020 Release 4, the ability to select the old form (1099-MISC, Box 7) will be removed, meaning you need to take some action before then.
What to do now
To start using the new 1099-NEC Form, Box 1, you must take one of two actions — prior to November 13.
Manually edit vendor record
- Go to AP > All (or Setup) > Vendors > Edit
- Click on the Form 1099 Link and change Form 1099-MISC Box 7 to Form 1099-NEC Box 1
- Select “Don’t update previous transactions” or Select “Update all transactions for this vendor for the current year only based on modified 1099 information”
Utilize the Vendor Import Template
- Create a view from Vendor list for all Vendors with 1099-MISC, Box 7
- Export the view as a CSV file for importing – make sure import file only has 3 columns – VENDOR_ID, FORM1099TYPE, and FORM1099BOX
- Update the FORM1099TYPE = NEC; FORM1099BOX = 1
- Save as CSV, and import using the Vendor Import (either under Company Setup > Import Data > Vendor Import) or from the Vendor list screen
Going forward, any new bills entered for that vendor will default to the new form.
This is important and time-sensitive enough that we recently held a webcast to cover the change and provide general 1099 processing tips and tricks. You can view the recorded event at your convenience here. Just be sure to do it before November 13. Of course, you can always contact our consulting team with your questions as well. While you’re thinking of 1099s, you might find this article interesting!