January 2006

Processing 1099s

Printing 1099s involves more than simply printing the forms; you should make sure that you have correctly set up your preferences to accurately track payments to 1099 vendors, review vendor  name, address and tax ID information, review 1099 payments you made to 1099 vendors, and print 1099s.

You can use the 1099 and 1096 Wizard to help you with these tasks; if you prefer, you can use our technique, which gives you a little more help when verifying the accuracy of 1099 payments.

In this article, we’ll show you how to start the 1099 and 1096 Wizard, and then we’ll walk you through our technique.

The 1099 and 1096 Wizard

The 1099 and 1096 Wizard walks you though running two reports to verify vendor name, address, and tax ID information and payments to 1099 vendors. It also help you check your 1099 preferences and then print 1099s and the 1096 Summary form.

To start the 1099 and 1096 Wizard, click File, point to Print Forms, and click 1099s/1096. The window shown in Figure 1 appears.

Figure 1. The 1099 and 1096 Wizard.

Click each of the buttons in this window to print reports that verify 1099 information, verify 1099 setup, and print 1099s.

We prefer our method because we feel that it helps you verify the accuracy of 1099 payments in more detail. Much of our method is covered in the 1099 and 1096 Wizard, so we’ll show you the appropriate dialog boxes and reports as we walk you through our method.

Setting up Preferences

To be able to process 1099s in QuickBooks, you must turn on the feature. Follow these steps:

1.      Open the Edit menu and click Preferences.

2.      In the Preferences box, click the Tax:1099 icon on the left.

3.      Click the Company Preferences tab (see Figure 2). Click the Yes option button at the top to enable 1099 printing.

4.      In Box 7, identify the QuickBooks account you use to track payments to 1099 vendors. If necessary, change the dollar amounts in the Threshold column.

Figure 2. Set up to process 1099s.

Contact the IRS to identify current thresholds; if you subscribe to the Tax Table Update Service, thresholds will automatically be updated for you.

 

Designating a 1099 vendor

QuickBooks will print 1099s for vendors that you correctly identify as 1099 vendors. Start by customizing a Vendor Contact List report to include the vendor’s name and address information and then filter the report to include only 1099 vendors. Print the Vendor Contact List report from the Vendor List window (click the Reports button). Once the report appears on-screen, click the Modify Report button and make the following changes:

• On the Display tab, make sure that checks appear in the Columns box next to the following fields: Vendor, Address, Tax ID and Eligible for 1099.

• On the Filters tab, Click the Eligible for 1099 filter and then click the Yes option button (see Figure 3).

Figure 3. Filter the report to show information for only those vendors set up as 1099 vendors.

Review the resulting report (see Figure 4), making sure that all 1099 vendors appear on it and that their information is complete, including a zip code and a Tax ID (a Federal Employer Identification number or Social Security number).

Figure 4. A report of information for all vendors set up as 1099 vendors.

If a 1099 vendor doesn’t appear on the report, you need to place a check in the Vendor Eligible for 1099 check box on the Additional Info tab of the Edit Vendor box for that vendor (see Figure 5).

If the Tax ID information is missing for any vendor, you need to add it on the Additional Info tab of the Edit Vendor box for that vendor (refer to Figure 4).

Figure 5. Make sure that you identify eligible 1099 vendors and supply their Tax ID information.

If any address or zip code information is incorrect or missing, supply if by clicking the Address Details button on the Address Info tab of the Edit Vendor box.

Verifying 1099 information

Before your print your 1099s, use two reports in QuickBooks to verify that the information will be correct. Use the 1099 Summary Report to verify vendors and amounts. Use the 1099 Detail Report to verify accounts against which you posted payments to 1099 vendors.

In Figure 6, you see the 1099 Summary Report. By default, it shows only those vendors who meet all of the following criteria:

• The vendors are set up as 1099 vendors

• You have made payments to the vendors that you posted against designated 1099 accounts.

• The payments have exceeded the 1099 threshold requirement.

Figure 6. The 1099 Report.

To verify the amounts on the default report, double click any amount that seems too low; QuickBooks displays the detail of the transactions that comprise the amount for the vendor. If a transaction is missing, you probably posted it to an account other than the designated 1099 account.

To verify that you have correctly identified all 1099 vendors, open the 1099 Options box on the report and change Only 1099 Vendors to All Vendors and then compare that version of the report with the default version. If additional vendors appear on the second report, you have posted payments against the 1099 account for a vendor that you didn’t set up as a 1099 vendor. Correct the vendor information and reprint the report.

To verify accounts, change the 1099 Options to All Accounts and compare the default version with the modified version of the report. QuickBooks displays an Uncategorized column on the report. Non-zero amounts in this column indicate that you have paid a 1099 vendor using an account that you didn’t designate as a 1099 account in the Preferences box. While you payment might be correctly applied to a non-1099 account, you should double-check the transaction. It is possible that you may need to change the accounts listed in your 1099 preferences.

You can double-click any amount on the 1099 Summary report that you want to explore in greater detail to display the 1099 Detail report, which shows the transactions that comprise the amount and the accounts to which the transactions were applied.

Aligning 1099s

Before you actually print 1099s in QuickBooks, you should test the alignment of the 1099 form in your printer. You check the alignment by printing a sample 1099; follow these steps:

1.      Load blank paper into your printer.

2.      Open the File menu and click Printer Setup.

3.      In the Printer Setup box (see Figure 7), select 1099s/1096 as the Form Name.

Figure 7. Select the 1099s/1096 form.

4.      Click the Preview button.

5.      When the preview appears on-screen, click the Print button.

QuickBooks prints a sample and redisplays the Printer Setup dialog box. Take the 1099 that printed onto blank paper and place it in front of a 1099 form. Then, hold the pair of pages up to light to see if everything aligned properly.

If things don’t line up nicely, click the Align button in the Printer Setup box. QuickBooks displays the Fine Alignment box shown in Figure 8. Enter the amount of vertical or horizontal adjustments you want to make in 1/100 inch increments. Use negative numbers to move information down or to the left; use positive numbers to move information up or to the right. Click the Print Sample button, and QuickBooks prints a sample that contains the word “Sample” in a grid. You can compare the preprinted form with the sample and use the position of the word “Sample” in the grid to judge how much further to adjust alignment.

Click OK when you finish aligning to redisplay the Printer Setup box. Click OK again to close the box.

Figure 8. Enter alignment adjustment amounts.

Printing 1099s

To print 1099s, open the File menu, point to Print Forms, and click 1099s/1096. In the 1099 and 1096 Wizard window, click Print 1099s. QuickBooks displays the Printing 1099-MISC and 1096 Forms box in which you specify a date range for the 1099s you want to print. After you click OK, QuickBooks displays the Select 1099s to Print window shown in Figure 9.

Figure 9. Select vendors for whom you want to print 1099s.

QuickBooks doesn’t require that you preview 1099s the way that you must preview W-2s. When you click Print 1099, QuickBooks displays the Print 1099s box, where you can set up printer information. Click Print to print 1099s.

Summary

With the information presented in this article, you can verify that the information that will appear on 1099s that you print will be accurate.