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:
- 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.
- 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.
- 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.
- 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.
- 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.)
- 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.
- 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!
Check out some other 1099 Posts
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 […]
The IRS requires you to deliver 1099 forms to your vendors by January 31st. You may not realize this, but that form is required to be on a physically printed piece of paper. Unless your vendor gives you specific consent otherwise. That requirement doesn’t make a whole lot of sense in our cloud-based digital age. […]
If all your clients have all their vendors’ tax information, 1099s are a breeze. But, let’s be honest, how often is that the case? You’re more likely to get roped in by your clients to track down missing info like some sort of TIN bounty hunter. And getting that info is a no small feat. […]