 QuickBooks Desktop 2023. 1099 reports. Let's do it within 2-its. QuickBooks Desktop 2023. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks Desktop Sample Rock Castle Construction Practice file provided by QuickBooks going through the setup process. We do every time maximizing the homepage to the gray area. View drop-down, noting we got the hide icon bar and the open windows list checked off. Open windows open on the left-hand side. Reports drop-down, company and financial. We're looking at that P and L. We're looking at UP and L. Range change 010124 to 123124. Customize it. That's January to December. Fonts and numbers to customize. Changing the font to 12 like we do every time. OK. Yes. OK. Then reports drop-down. Again, company and financial. This time down to the balance sheet standard. Changing the dates this time with the drop-down. Fiscal year of 2024. Customize it. Fonts, numbers, poor, fat, or change them to 12. OK. Yes. OK. That's the setup process we do every time. Now we're going to be looking at the 1099 reports. A couple ways you can get there. You can go to the reports drop-down. Vendors and payables. You got your 1099 reports down here. We can also go to the report centers. Let's do that now. Report center. Maximize it because it un-maximizes for some reason. When we go to the report center, vendors and payables. And we're scrolling down to the 1099 reports. So, open one up. The 1099 reports are in the vendors section because they have to deal with people that we are paying. Remember, for QuickBooks, vendors represent people that we're buying goods and services from. And cash ultimately going out typically from the company to the vendors for those goods and services. We're going to use within the business. Now, for reporting purposes, taxes are going to come in and confuse things once again. Because from an IRS perspective, the IRS has an income tax. And what they would like to do on the leverage side or where the IRS has leverage to make sure that they're collecting on the income tax is on the payer within a business transaction. So, in other words, every business transaction typically has, if we go back to the home page, we are all basically customers and vendors. Every transaction has a customer and vendor. From the standpoint of entering data in QuickBooks, customers represent goods and services. We're providing to others, hopefully receiving money at the end of the transactions. Vendors representing goods and services provided to us, money going out at the end of the transaction. But every transaction we are in, we are also the other side. We're a vendor and we're a customer. So, when we're paying someone, that's when the government typically has the most leverage to try to get information from us about the person we are paying. The person that we are paying money to is receiving generally income. So, they're going to be getting money. Typically, the IRS wants to know about that because we have an income tax. So, the reason they have leverage against the payer is because we want to lower our income tax reporting by getting a deduction. So, whatever we pay for for our business, in order to get the deduction, the IRS can say, hey, we would like you to give us some reporting information if you want that deduction. And that's where the leverage comes in. So, the biggest expense, for example, for us is typically to be paying employees. And the government says, hey, do you want a deduction to pay those employees? Well, then you've got to give us a bunch of information about them. You've got to actually take the money that you were going to pay them and pay it to us on their behalf for their income taxes. Now, they have a little less control when it comes to paying other people, just normal vendors. But in certain cases, we still might have to be issuing the 1099. I won't go into the case, the rational why in detail because this isn't a tax course. But generally, if you're giving money to a contractor, like a sole proprietor, someone that's not incorporated. Obviously, if you pay like utility bill to Edison Company, then the government's not really worried because they have other systems in place to regulate large companies like that. But if you're paying a sole proprietorship, a contractor, the government's worried that those smaller people will not report their income and they have no other system of control to see that they are doing so. So, they're going to want the 1099s. That's where kind of the 1099s come in. So, if you've got vendors, people that you're paying that are not incorporated, you pay them over a small dollar amount, like $600 or something, then you might have to issue the 1099s at the end of the year, which are just reporting documents to show that you paid these people so the IRS can go after them for their income taxes. So, note that when I look at my summary report, that means I've got to tell QuickBooks something for QuickBooks to be able to process the summary report. The summary reports can then be used for us to generate the actual 1099s, which you may be able to process in QuickBooks by going to the vendor's dropdown and going to the 1099 forms. And you can print and e-file the 1099 forms or at least look into the process of e-filing at the end of the year, or you can file them by hand. Either way, you've got to do some added information to note which vendors are subject to the 1099 requirement. This is usually kind of a little bit of a tedious process because normally when you pay vendors, for example, if I go to the Home tab, we might wait until the checks clear the bank and use the bank feeds if we're just paying them electronically. And in that case, when we set up the vendors, it's usually when we enter the data from the checks, so we'd have to make sure to go in there and tell the system that this particular vendor is one that might be subject to 1099 requirements. Or when we write the check, we might set up vendors at that point in time, or when we enter the bills, we might set up the vendor at that time. When we set up the vendors, we're usually just concerned with paying someone, may not be as concerned with getting all the 1099 information we need for year-end reporting, and we've got to kind of keep that stuff in the back of our mind. So if you end up at the end of the year and you don't have all the 1099 reporting stuff, you might want to go through your vendors and try to determine which of them might be subject to the 1099. So in other words, you can go to the vendor center is one way you might do it and just look through your list of vendors and try to determine which ones would need a 1099. If you go into a particular vendor and you edit the vendor, then you can indicate for the tax settings here that they would be subject to a 1099. That's where you're going to basically turn on the 1099, which is one of the items that would then be used for QuickBooks to determine that this person should be included in the 1099 reporting so you can process the report so you can issue the year-end 1099s. So another way you might go in there if you're trying to scan your 1099 or your vendors to see if you need to add them to a 1099 list is you might go to the reports themselves, open up the 1099 report, possibly run it for 010124 to 123124, and then you might say, okay, I'm going to first adjust the settings up top to see the dropdowns. Maybe I'm going to go to all vendors instead of the only 1099, allow all accounts and then you could use the thresholds or possibly not use the thresholds. I'll keep the thresholds on and then you have two main types of 1099s. The NEC is probably the most common at this point, and then you can basically go into here and you can try to go down and say, okay, which vendors are going to be over the threshold, the low threshold of $600 that I would have to pay, and then try to determine which of these vendors are going to be non-corporate entities and therefore subject possibly to the issuing of the 1099s. So then you can go through here and try to tick and tie off which ones need to be adjusted and made into a 1099 customer. Once you have determined that, then you can go back to your vendors over here and basically whichever one, if this one right here was supposed to be or needs to be a 1099 individual, we can then edit that item and go to the taxes and say they're going to be subject to the 1099 and okay. Now this one, of course, you need the ID number as well. So if I say 5555555555555555 as an ID number, the ID might be a social security number if they don't have an EIN number. So you want to, when you try to work with a contractor, typically you would like for them to give you their number first, their information, their address, and their number which might be an employee identification number and if they don't have that, their social security number, you would prefer to work with someone that has EIN numbers typically because that might mean they're more kind of professional and organized in it. And that's part of the filing requirement. And you could use the form, this is the IRS.gov website form W9. You can search for it for IRS.gov and look more into the instructions related to it. Use form W9 to provide your current taxpayer identification number TIN to the person who is required to file an information return with the IRS to report, for example, income paid to you, real estate transactions, mortgage interest paid, acquisition and so on and so forth. Now when we say that it's income paid to them, you might say, hey, I'm not paying them income. They're not my employee. I'm paying them for goods and services they provided to us. But from the taxpayer's perspective, from the IRS's perspective, that's income to them. And so they want to know that so they can report that for the income taxes. So we could go through here and try to add a couple of these items. Let's take a look at the vendors for last year. Let's take a look at this for 21. So let's say Sloan Roofing. We've got, let's go up to the top bank, bank, base shore. We've got Bruce's office. Let's add Bruce. Bruce's office. So we're going to go here and then I'm going to say let's edit and let's go to the tax information. And let's say we're going to say Bruce is added. Let's say seven, seven, seven, seven, seven, seven, seven, seven. And the EIN might be like a 99-something, something, something format instead of the social security format. And then we're going to say, okay, report here for the 1099. And then we may be able to then go to the 1099 only and allow all accounts. I think that there used the threshold, the NEC. Let's keep it there. And so now we've got this list of people. So that's how the report can generally be used. Now, when you process the 1099s at your end, you could go to the vendor dropdown, 1099 forms. You've got the print, e-file 1099 forms. You could go through, review 1099 vendors. This is another report that you could see, you know, which vendors have the 1099 turned on and off fairly easily. It's not a report that you can use as easily to kind of determine if they're subject to a 1099 because it doesn't give you the balance of how much you pay them. Periodically, you might need to go through your vendors. You might have a whole lot of vendors that you don't even pay money to anymore as active. You might try to clean them up and make them inactive to make this process a little easier. Then they've got the list that have been checked off here. We can go to the vendors dropdown, and we've got the detail report, and then you can order 1099 forms if you so choose. That's kind of a marketing thing because they'd be selling you, in essence, the 1099 forms. If you go into the e-file process before you prepare file form 1099 miscellaneous and form 1099 NEC, note the following. You can map an account to only one of the 1099 forms. These two forms, 1099 mis and NEC are two different forms. It used to be the miscellaneous included, the main thing that's on the 1099 NEC non-employee compensation, and then they broke out the 1099 NEC. This is, for most people, the one that you're usually going to be using for contractor, stuff you're paying to contractors typically. If you have an account with payments that are applicable to both forms, it's recommended that you create separate accounts for payments made specific to each of these forms. In other words, if we had an issue between which one of these two it's going to be applied to, we could go to the accounts and assign the accounts that we're paying the vendors for to one of these forms. Then if you've got a part of that account going to both forms, you can create two accounts to try to manage your 1099s a little bit more easily. I won't go into that in detail. Do you want to print? I'm going to say yes. Then we've got our little widget process to take us through the process. Let's help you prepare and file your 1099 forms. You must file form 1099 NEC to report non-employee compensation and form 1099 miscellaneous to report miscellaneous income. If you have vendors who are eligible for both forms, you need to prepare and file them separately. Things to know form 1099 NEC and form 1099 miscellaneous filed in New York or Wisconsin have special rules for boxes state tax withheld and state payers state number and they need to be filed accurately. You can print and mail the forms to the IRS or file electronically with the IRS using the 1099 e-file service. The IRS requires you to e-file if you submit over 250 forms, which is fairly high number. So we're going to be looking over here on this side. We've got 1099 NEC because that's the most common report non-employee compensation like the money you pay to an independent contractor who perform work for you furnish the form to recipient by January 31st, 2022. So the 1099 form has to be given to them, the person who worked for you for their informational purposes to help them out to prepare their taxes but mainly the government wants it, right, so that they can double check that that person printed or actually reported their income. Print and mail the form to the IRS or file electronically by January 31st, 2022. Then you got form 1099 miscellaneous, which used to be the one that we also used for the contractor, but now it's been changed a little while ago, a few years ago. Report miscellaneous income such as rental income, royalties and Native American gaming profits, furnish form to the recipient, same kind of process. So I'll say get started over here on this side. It says select the vendors that need a form 1099 NEC. You need to make the vendor selection every time you start this process. So it's selected them off and hopefully you probably want to check it to the actual reports that that were run. But it looks like there, you know, they should be able to check those off given the information provided to the system, including the vendors being identified to be having a 1099 that we checked off and the balance that they have that they're over the threshold. And then if there's any other kind of things that we put in there in terms of the account showing which type of 1099 it should take that into consideration at this point. We're going to say next and it says verify your 1099 info. So we got the vendor, we got the tax ID, we got the company name. This would generally be something, a field that we would like to have populated. But these two fields would be necessary for sure. Address is necessary for sure for the contact information is what we're going to be needing because that's what the IRS wants to identify them on the IRS side of things. Obviously, the these people are numbers. So they have to have this is like an EIN type of number. And these are like the social security formats of the numbers so that they can determine who they are and make sure that they reported their income. So we can say, OK, continue map vendor payment accounts. You used these QuickBooks accounts to track payments to your 1099 vendor. Now tell us where the amount paid from each account should appear on form 1099 NEC. So we've got these items you can map on an account to only one of the 1099 forms. So we've got the expenses here and generally it's going to be non-employee compensation. Usually it's going to be that's the one that is most common. Non-employee compensation. We're going to map it to that's the box on the actual 1099 form that it would be going to the 1099 form looks like this. Just so you can get an idea of it. So this is the non-employee compensation 1099 NEC. See if I can make it a little larger. And then box one, that's where the major number would go non-employee compensation here. So I'm going to minimize that. And so let's say report all payments in box one. We could check that off. That would make it easier. So continue our review payment and exclusion. The IRS requires you to exclude from 1099 forms any payments you make by credit card, debit card, gift card or PayPal. So it's gotten a little bit more confusing in terms of how you pay someone because it used to be that you pay someone with checks mainly or possibly cash. But now if you pay them in some other ways, the IRS is trying to get these other formats of payment as being the intermediate of the person that's going to rat out the person that got income, right? So the problem with that is if they're able to get these people to tell the IRS that they've received money and we issue a 1099, then you can end up with two 1099s for the same amount for the same money going to the same vendor. And that's going to cause the vendor problems because the IRS is going to think that they got twice as much money or something like that. So you got to take into consideration the rules on when you need to report to something and be careful with them because you don't want to mess up the issue money that they earned when they didn't really earn the money or double up on the 1099s. That'll cause problems for the people you're working with, your vendors. So include and exclude payments showing all the payments you made to the selected vendors. For QuickBooks to exclude these payments from 1099 forms, select view include payments, edit the check box field to include an appropriate note. To verify these payments have been excluded from 1099 forms, select view exclusion. So view includes, these are the items. I could go to the view excluded and these are the items there. I'm going to say, okay, let's continue. And so confirm your 1099 entries. Review the summary of vendors for whom you are creating form 1099 NEC and the amounts being reported for a calendar you're showing. Double click any amounts to review transaction details. So we could go in and use our zooming tool to drill into these items in more detail. And so then we can continue. Choose a filing method. You can print and mail the forms to IRS or electronically with IRS 1099 e-file. You can print form 1099 to pre-printed forms. So when you print them, you still have to order the forms because you can't just print them on a blank piece of paper. You've got to have the pre-printed forms that you put into the printer and print them on it. File form 1099 NEC electronically with IRS using 1099 e-file, fees will apply. So there's no real getting away from the fees. Either you have to buy the forms or you can e-file, which hopefully would be an easier process, but you still have a fee related to it. That's the general idea.