1099s

The 1099 process creates the 1099 file for electronic submission to the government or for actual printing of 1099 forms. The 1099 transmission is not created if any required information is missing. The 1099 Detail Report can show you the vendors with missing required information.

1099 information is determined by the APCodes assigned to payments. The proper setup of APCodes is essential to the accuracy of 1099 reporting. You can define default 1099 APCodes on vendors who will require a 1099 at year's end. You can change APCodes on payments before or after merge to ensure 1099 information is correct.

When you create an invoice for a vendor, its default APCodes are copied to the invoice record. When a payment is made on the invoice, the APCodes from the invoice are copied to the payment. The 1099 amount is adjusted proportionately based on the payment amount. You can specify multiple APCodes on each invoice and payment so that it is possible to have multiple 1099 types on invoices, payments, and vendors; however, any given APCode can only appear in the table once.

Generate 1099s is available from the Vendors, 1099s, and 1099 Transmissions folders.

1. In the Navigation pane, highlight the Accounts Payable > Vendors folder.
2. Start the Generate 1099s wizard.
   • To generate 1099s for all or a filtered subset of vendors:
     1. Right-click the Vendors folder and select Select and Generate 1099s from the shortcut menu.

     2. On the Selection tab, define any filters to apply to the vendors.

        

   • To generate 1099s for specifically selected vendors:
     1. In the HD view, select the vendors to include in 1099 generation. You can use Ctrl and/or Shift selection to select multiple vendors.
     2. Right-click on your selection and select Generate 1099s from the shortcut menu.

   • Select the Options tab.

     

3. Select the four-digit Tax Year to generate 1099s for.
4. This step applies only to sites with multiple companies which share the same Payer TIN. Mark the Disregard Minimum Thresholds checkbox only if you want the process to include vendors with payments less than the minimum threshold reporting amounts. For example, if the threshold is $600 and a vendor has $450 of non-employee compensation, marking the checkbox would cause a 1099-NEC to be generated for the vendor even though the amount is below the threshold amount. For more on reporting 1099 information for multiple companies with the same Payer TIN, follow this link.
5. Mark the FATCA Filing Requirement checkbox if your organization must comply with FATCA provisions. If you mark this checkbox, the vendor code will print in the "Account number" box on the 1099 form.
6. This step applies only to sites with multiple companies which share the same Payer TIN. The Vendor Account Prefix affects only vendors with the Separate 1099 Form checkbox marked on the Vendor tab of the vendor record. Enter the text to prepend to the vendor account code to form the value that prints in the Account Number box of Form 1099 or that is transmitted in the "Payer's Account Number for Payee" field of the electronic file.

   

   Notes

   • The prefix can include a delimiter, if desired. For example, a vendor code of ABCDE with a prefix of xyz- would look like xyz-ABCDE in the Account Number box.
   • The "Payer Account for Payee" field is limited to 20 characters in the electronic file. Be mindful of this limitation when setting the prefix.

   For more on reporting 1099 information for multiple companies with the same Payer TIN, follow this link.

7. In the Return Types section, mark the checkbox for each return type to generate. Your options are:
   • 1099-DIV Dividends and Distributions
   • 1099-INT Interest Income
   • 1099-MISC Miscellaneous Income
   • 1099-NEC Nonemployee Compensation
   • 1099-R Distribution from Pensions, ...
8. In the Taxpayer ID (TIN) field, enter the payer's nine-digit taxpayer identification number (TIN). The TIN may be an employer identification number (EIN), social security number (SSN), or individual taxpayer identification number (ITIN). This field allows up to 11 characters so that you can include dashes in the TIN.
9. In the Name Line 1 field, enter the name of the payer whose TIN appears in the Taxpayer ID (TIN) field. This field allows up to 40 characters.
10. Use the Name Line 2 field to continue the name of the payer from the Name Line 1 field or leave the field blank. This field allows up to 40 characters.
11. In the Address, City, State, ZIP/Postal Code, Country (Foreign), and Phone Number fields, enter address and phone information for the payer's shipping address. The address and city fields allow up to 40 characters each.

12. If the payer participates in the Combined Federal/State Filing Program and/or is required to file paper copies of the 1099 with a state tax entity, enter the abbreviated name of the state in the State Code field.

    Note

    State reporting is currently only supported for a single state; i.e., there is one payer state code and it is the same for all payments to all vendors. Look for multi-state 1099 reporting in future releases.

13. If the payer participates in the Combined Federal/State Filing Program and/or is required to file paper copies of the 1099 with a state tax entity, enter the payer's state identification number assigned by the state in the State ID field.
14. If the payer will not be filing 1099s after this year, mark the Last Year for this Payer to File checkbox.

15. Click Next >>.

    

16. If you are ready for ActivityHD to prepare and validate the 1099 data, click OK.

Note

Vendors that do not meet the $600 reporting threshold will be excluded from validation. They will not cause missing-information errors, and 1099s will not be generated for these vendors.

17. ActivityHD prepares and validates the data and reports its results.

    

    If errors are encountered, the error messages are reported here. You cannot continue with 1099 generation until all errors are resolved. 1099s cannot be generated if required information is missing. Run the 1099 Detail Report to see which vendors are missing required information.

    If no errors are reported, continue with step 18.

18. Click Next >>.

    Use the "Print Forms" step to print Forms 1099 Copy B for mailing to payees.

    If you have fewer than ten federal information returns and choose not to file electronically, use this step to also print Forms 1099 Copy A and the 1096 Summary Report for submission to the IRS.

    

19. If the 1099 process builds one or more 1099s which match existing 1099 records (same payer TIN, payee TIN, tax year, and form type), it determines whether each of the new 1099s is a duplicate or a correction. If any of the payer or payee name fields, address fields, or box code amounts differ, the new 1099 is flagged as a correction; otherwise, it is considered a duplicate. The number of duplicates found is reported on the Options tab of the "Print Forms" step. If there is at least one duplicate 1099, the Include Duplicates checkbox is enabled. Mark the checkbox if you want to include duplicates when you print 1099s. To skip reprinting 1099s which may have been printed when the previous 1099 records were created, leave the checkbox cleared.
20. In the Return Types section, mark the checkbox for each return type to print. If there are no records of a particular return type to print, its checkbox is disabled. Valid options include:
    • 1099-DIV
    • 1099-INT
    • 1099-MISC
    • 1099-NEC
    • 1099-R

21. In the Form Design section, select the type of report design to use. Your options are:

    • Copies A, B, C - Prints on pre-printed Copy A and/or Copy B and/or Copy C forms.
    • Copy B - (Recommended) Prints Copy B forms on blank paper for sending to 1099 recipients. An image of the 1099 form is incorporated in the printing.
    • 1096 Summary Report - Prints the 1096 Summary Report of 1099 information for accompanying submission of printed Forms 1099 Copy A to the IRS.
    • Custom - Enables the field below so that you can select and print a custom form design.
In the toolbar, click the icon for the type of output you want:
• - Provides access to two preview options.
  • Preview - Click the icon or click the drop-down arrow and select Preview from the drop-down menu to view the report in the Crystal Reports viewer.
  • Preview to PDF - Click the drop-down arrow next to the icon and select Preview to PDF to view the report in the PDF reader.
• - Opens the Print dialog so that you can select and configure a printer and then print a paper copy of the report.
• - Opens the Report Email dialog so that you can address and compose an email that the report will be attached to. For best results, ensure your email client is running before you attempt to send a report via email.
• - Opens the Export Report dialog so that you can save the report to a file. File types include Crystal Reports (.rpt), PDF (.pdf), Microsoft Excel (.xls), Microsoft Word (.doc), rich text (.rtf), and XML (.xml).
From
The email account from which to send the email. Valid options are:
• Windows user default account. Sends email using the user's Windows default email account. For most users, this is the account configured in Outlook or another email client application.
• Server personal. Sends email using the email configuration for the system or company server and the email address on the current user's authorized user record. The authorized user record must have a confirmed email address.
• Server generic. Sends email using the email configuration and "from" address for the system or company server. This option requires "Send generic" access to the Server Email resource.
To
The email address(es) to which to send the email. Separate email addresses with semi-colons.
CC
The email addresses to copy on the email. Separate email addresses with semi-colons.
BCC
The email addresses to blind copy on the email. Separate email addresses with semi-colons.
Subject
The subject line.
Text box
The body of the email.

23. When you finish printing 1099s, click Next >>.

    

24. To create 1099 records for the 1099 forms generated in the process, ensure the Create 1099 Records checkbox is marked. If you clear the checkbox, the Create Attachments checkbox is cleared and disabled.
25. If the Create 1099 Records checkbox is marked and you want to create 1099 forms to attach to their corresponding 1099 records, ensure the Create Attachments checkbox is marked. If you want to create records but skip attachments, clear the checkbox.
26. If the Create Attachments checkbox is marked, the Design field is enabled. Select the form design to use to create the attachments.

27. Click Next >>. You are prompted to confirm that you want to create 1099 records and attachments.

    

Click Yes.



At this point, you can double-click a 1099 record in the right pane to drill down to the 1099 window.

When you finish working with 1099 records, click Next >>.

Use the "Create Transmissions" step to create the electronic 1099 transmission file for submission to the IRS.

This step is not necessary if you printed paper Forms 1099 Copy A for submission to the IRS in the "Print Forms" step. You can click Finish to exit the process.



In the Original Transmission section, the Filename and Type fields are enabled if original records are detected. If these fields are disabled, skip to step 32. Otherwise, in the Filename field, browse to the folder to save the electronic transmission file to and specify a file name.

From the Type drop-down list, select the type of transmission file being created. If this is an original transmission, the value defaults to "Original". Valid types are:

• Original
• Replacement
• Correction
• Test. Test transmissions can only be sent through the FIRE Test System at https://fire.test.irs.gov/. Never transmit live data in the FIRE Test System.

In the Correction Transmission section, the Filename and Type fields are enabled if correction records are detected. If these fields are disabled, skip to step 33. Otherwise, in the Filename field, browse to the folder to save the electronic transmission file to and specify a file name.

From the Type drop-down list, select the type of transmission file being created. If this is a correction transmission, the value defaults to "Correction". Valid types are:

• Original
• Replacement
• Correction
• Test. Test transmissions can only be sent through the FIRE Test System at https://fire.test.irs.gov/. Never transmit live data in the FIRE Test System.

In the Transmitter TIN field, enter the transmitter's nine-digit taxpayer identification number (TIN). The TIN may be an employer identification number (EIN), social security number (SSN), or individual taxpayer identification number (ITIN).

In the Transmitter Control Code field, enter the five-character code assigned to you by the IRS. You must have a Transmitter Control Code (TCC) to submit 1099 information electronically.

In the Transmitter Name 1 field, enter the usual business name of the transmitter. If you need a second line for the name, use the Transmitter Name 2 field.

In the Company Name 1 field, enter the name of the company to which correspondence about the electronic transmission should be directed. If you need a second line for the company name, use the Company Name 2 field.

In the Company Address; Company City, State, Zip; and Country (Foreign) fields, enter address details about the address to which correspondence about the electronic transmission should be sent.

In the Contact Name field, enter the name of the person the IRS should contact regarding problems with the electronic file or its transmission.

Enter the Contact Phone Number.

Enter the Contact Email Address.

Click Next >>. You are prompted to confirm that you want to create the 1099 electronic transmission file.



Click Yes.



At this point, you can double-click a 1099 transmission record in the right pane to drill down to the 1099 Transmission window.

When you finish working with 1099 transmission records, click Finish.

You can run Generate 1099s when there are existing 1099 records for the same payer TIN, payee TIN, tax year, and 1099 form type. When the Prepare Records step creates a 1099 record that matches an existing record against all four criteria, it determines whether the new record is a duplicate or a correction. If the payer and payee name fields, address fields, and box code amounts match exactly, the new record is considered to be a "duplicate". If any of the aforementioned is different, the new record is deemed a "correction".

You can determine how duplicate records are handled in the Print Forms step. If you do not mark the Include Duplicates checkbox, duplicate records are not printed. If you mark the checkbox, duplicates are printed. This lets you control which records are printed based on whether forms were actually printed when the previous 1099 records were created.

When you produce printed correction forms, the "Corrected" checkbox on the form is automatically marked. In addition, the correction date is shown on the Copy B forms to help the payee/recipient determine which is the most current correction in case multiple corrections are issued. When you file electronically, correction records are automatically grouped into separate "Payer A" sections when the electronic file is constructed.

The following methodology is applied when determining how to handle records prepared in the Generate 1099s process for transmission:

• If no previous transmission record is found, the 1099 record is added to the "Original" transmission.
• If the previous transmission record is identical, the prepared 1099 record is a duplicate and is excluded from transmission.
• If the previous transmission record is different and has a status of "Good", a correction 1099 record is created.
• if the previous transmission record is different and has a "Not Yet Processed" status, the prepared 1099 record is excluded from transmission to provide you the opportunity to cancel the previous transmission if needed.

One-transaction corrections

Certain types of corrections require only one transaction to effect the change. One-transaction corrections occur when the original return was filed with one or more of the following error types:

• Incorrect payment amount codes in the Payer "A" record
• Incorrect payment amounts in the Payee "B" record
• Incorrect code in the distribution code field in the Payee "B" record
• Incorrect payee indicator
• Return should not have been filed

Two-transaction corrections

Other corrections require two transactions to effect the change. Two-transaction corrections occur when the original return was filed with one or more of the following error types:

• No payee TIN
• Incorrect payee TIN
• Incorrect payee name
• Wrong return-type indicator

The first transaction contains a section of A/B/C records for the original information. The B records are coded with "G" (corrected return code) and all amounts are set to zero.

The second transaction contains a section of A/B/C records for the corrected information. The B records are coded with "C" (corrected return code) and the amounts are set to the correct amounts.

Example of two-transaction correction - incorrect federal ID

If the tax identification number (TIN) on a 1099 record is incorrect, you need to produce a correction 1099 record and a new 1099 record for the same tax year, form type, payer ID, and payee ID (provided a corresponding duplicate/correction record isn't already generated). To do so, update the federal ID on the vendor record and rerun the Generate 1099s process. The following 1099 records are created:

• A zero-amount correction 1099 record is created for the old payee TIN.
• A new 1099 record is created with the correct amounts and the new payee TIN.

Starting with tax year 2021, the "State income" amount can be reported on Forms 1099-MISC and 1099-NEC.

As of this writing (September 2021), state income reporting is only available to payers that report for a single state; i.e., payers with one state code and where that state code is the same for all payments for all vendors. Multi-state reporting is anticipated in a future release.

The first tax year that you participate in state income reporting, the following additional preparation is required to set up for reporting:

1. APCode. Create an APCode for state reporting that references the appropriate 1099 type:
   • For 1099-MISC, the APCode should have a 1099 type of "1099-MISC Box 17 - State income".
   • For 1099-NEC, the APCode should have a 1099 type of "1099-NEC Box 7 - State income".

2. Assign the APCode to vendors. On each vendor for which you are required to report state income, add the APCode you created to the APCodes table on the Defaults tab.

   

3. Update existing invoices. Existing invoices for the tax year for which you are initiating state income reporting (2021 or thereafter) must be assigned the new APCode. To apply the changes made to the default APCodes on vendors to the invoices paid in the tax year (or that will be paid in the tax year or later), run Accounts Payable > Invoices > [right-click] > Select and Update APCodes.
4. Update existing payments. Existing payments for the tax year for which you are initiating state income reporting (2021 or thereafter) must be updated to apply the changes to invoice APCodes. To apply the changes, run Accounts Payable > Payments > [right-click] > Select and Update APCodes.

Once your data is set up for state income reporting, and in successive years, merely run the Generate 1099s process, making sure to respond to the State Code and State ID fields on the Options tab of the Generate 1099s wizard.