Top 1099 Errors Made in QuickBooks

It’s 1099 season and there are a few more days until the deadline, January 31st. If you aren’t going to make it, make sure to fill out an extension now (Form 8809)!

For the rest of you, I keep seeing some of these common errors made in QuickBooks Online when it comes to 1099s. Here are some things to look out for:1099 Errors

  1. Make sure your vendor is listed as a vendor. I’ve seen several occasions where a vendor was listed as an employee or maybe even a customer! QuickBooks ignores those types of names when figuring out what 1099s to prepare. My recommendation is to run the transaction detail for the entire year by “Name”. Then, scan through there to make sure you aren’t missing any names on the vendor list.
  2. Multiple vendor names for one vendor. If you have ABC Consulting and then ABC Consulting, LLC in your QuickBooks file, QuickBooks sees those as 2 separate vendors and you might end up under the threshold for 1099 preparation. Make sure you go through your vendor list and merge any duplicate vendors first.
  3. Expenses aren’t booked to the right account and can be missed when you are pulling only certain accounts from QuickBooks to prepare the 1099. Guess what I do? I run the transaction detail for that vendor to make sure I’m not missing anything. Actually, I’m saving that report in my clients’ files this year so when a vendor comes back and questions an amount, I can reference that spreadsheet.
  4. Make sure you are getting the right number in the right box. Remember, 1099s have several boxes on them and non-employee compensation is just one of them. Make sure you are mapping rents to the rent box, attorney fees to the attorney fees box, etc.
  5. The vendor’s TIN and address don’t match up. How are you supposed to know? You honestly aren’t. There are some products out there that let you do a TIN match to confirm the information is correct with the IRS. It is a pretty cheap check and prevents the letter 2 years from now notifying your client that there was an error on the 1099. (Really, that’s all they read in that letter and freak out and call you.)
  6. Preparing 1099s for contractors that don’t need one. There are so many rules when it comes to 1099 prep. Remember that if you paid a vendor by credit card or PayPal, you don’t have to include those payments on a 1099. On the reverse side, 1099s have to be prepared for attorneys even if they are a corporation. In the end, really read through the instructions to see which rules you need to be aware of.
  7. Don’t email the vendors their 1099 unless you have their permission. When in doubt, make sure you are also mailing out the 1099s. As a backup, you can email the 1099s, but there is some rule that they have to give you permission if email is the only form of delivery.

What other 1099 errors have you seen in QuickBooks? Just like any software, you need to understand how the program is determining what ends up in what box. If you haven’t used QuickBooks correctly, then you are more prone to errors at the end of the day. If you find yourself in a mess, just reach out, we can help!

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Author: 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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