2020 1099 Changes

The 2020 1099 season is upon us and there have been a few changes that you need to be aware of when preparing 1099s for your clients. I’ve pulled together information from several different resources to try to help you.

IRS 2020 1099 Guidance

1099-Misc has now been split up into 2 forms to pull out any Non-employment compensation. What used to be box 7 is now its own informational return – 1099-NEC.

On a side note – Why does the IRS make it so difficult to find the form for the correct year? I had to hunt down the correct links to the 2020 forms. If you go directly to the website, you will most likely be directed to the 2021 form.

Data Gathered From Your Accounting System

I’m not sure it is the best way, but I worry about so many potential mistakes on data entry, that I end up just downloading the complete ledger by name. Then, I go through to manually review the information and calculate the amount paid by ACH, Check, or Cash. You can easily compare that to whatever 1099 report your accounting system might have to make sure everything is lining up. See, there is room for error either way. (1) There could be an error with not filling in the fields correctly in the accounting system or (2) There could be an error with just your manual review process. Both are highly prone to human error.

1099 Software for 2020

Here are several software programs that can help you prepare 1099s. You do not want to do prepare 1099s manually. It is a huge waste of time and effort. There are a ton out there, but I feel like it really comes down to a few popular programs. No matter what you choose, you need to be sure that you completely understand how the software works.

Other 2020 1099 Resources

Here are some articles to check out to help you during your 1099 preparation.



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Cathy Iconis

Cathy Iconis, CPA is the creator and facilitator of the weekly tweetchat #QBOchat and the website QBOchat.com - a community for QuickBooks Online Users. She is also the founder of Iconis Group, an Intuit Top 20 Firm of the Future, that supports small businesses all over the United States with their bookkeeping needs. She is a five-time recipient of the prestigious CPA Practice Advisor 40 Under 40 Award, given annually to just 40 people nationwide.

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