Join Jess Stratton for an in-depth discussion in this video Setting up 1099 forms, part of QuickBooks Pro 2016 Essential Training.
- A 1099 is a tax form that you need to file with your taxes to send to your vendors and consultants who you paid a certain amount of money to in the previous year. The IRS laws will tell you what that amount threshold is to which you have to send a 1099. For example, if you must send 1099s to any vendor or consultant to which you paid at least 600 dollars or more during the previous year, then with just a few things in place, Quickbooks can keep track of this for you. Here is what has to be in place to file and send your 1099s.
Let us take our shelter services as an example. Remember, I used the Mycat veterinary office to do all of our shelter services. If I paid that consultant or office enough over the course of last year, then I need to send them a 1099. The first thing that needs to happen is that that particular vendor needs to be marked as eligible to receive a 1099. I will click Vendors to go into the Vendor center, then I will double click on Mycat. I'll change to the Tax Settings tab.
I am going to make sure there is a check box next to Vendor eligible for a 1099. In the field above, you can put their Vendor tax ID. This is going to be their federal tax ID, or their Social Security number if it is just a single consultant. You will have to get that information from them. I'll click Ok to get out of this box. Once that is in place, the next thing that has to happen is that you need to be sure that you filed all their bills. I am going to close out of this and select Enter Bills. I am going to pull out a bill from Mycat, by clicking Find on the top left-hand side, and in the Vendor drop-down I will choose Mycat.
I will click the blue Find button, and here I can see a bill from them. It is for a large sum of money and if I look at the Bill Due field I can see that that bill was for the prior year. It is not just enough to have this bill in place though, I can look and see that it is paid. Remember that the 1099s are to whoever we send money to. So we also have to pay that bill in Quickbooks, or at least tell Quickbooks that we have sent them that much money over the course of last year. So I mark them as being eligible to get 1099s, I have entered the bill and paid it.
Now we can go onto Preferences and use the 1099 Wizard. I will close out of this. I will select Edit, and then choose Preferences. All the way down at the bottom of the Preferences screen, select Tax 1099, and change to the Company Preferences tab. Make sure you have the Yes radial button selected on the Do you file 1099-MISC forms. When you are ready to run the Wizard, select Click here under the If you're ready to prepare your 1099s.
This is going to bring up the Quickbooks 1099 Wizard. Click the blue Get Started button in the bottom right-hand side. The first thing you need to do is select your 1099 vendors. Remember, we already went through and told Quickbooks that Mycat is indeed eligible for a 1099 so that is why they are automatically selected here. I will click Continue. Here is where I can verify all their information and I will select Continue again. Here is where we are going to map out our various payment accounts. Now, Quickbooks already knows that over the course of the previous year I have used this Mycat shelter service to send Mycat more than 600 dollars worth of money which is the threshold.
You can view those thresholds by the way, by clicking Show IRS 1099-MISC filing thresholds on the bottom right-hand side of the screen. It is going to bring up a list so that you can see the dollar amounts of money that you have to send to those vendors to file a 1099. I can see here that for Box 7: Nonemployee Compensation, the threshold is 600 dollars. I'll click Cancel to close out of this box. But here is where we apply this money to a certain 1099 box. In the Apply payments to this 1099 box I can click the drop-down.
Here is where I can choose all the boxes. And indeed, Box 7: Nonemployee Compensation, is already selected. You may have more accounts that are not showing up in this list. In fact, in this drop-down list above it, it says Show 1099 accounts. But I can choose Show all accounts. Here is where you can see all of your accounts as listed in your chart of accounts. To any account that you know matches one of these thresholds, you can select it in the view. You could have changed many different accounts to track all your different vendors and to see where that money was going.
I will click Continue. Here is where you can view any payments or exclusions based on IRS laws. I am going to click Continue again, and now you are ready to see what miscellaneous 1099 forms are going to be created. So here is our vendor. Here is the Box 7 field, because over the course of last year, for all their shelter services. I compensated this company 1350 dollars. So now I am at the end of the Wizard. If I click the blue Continue button I will move on to actually filing this entry which I am not going to do because this is an example.
So I am just going to click Save & Close. I can come back to that at any time by going back into Preferences, and choosing that 1099 form, the very bottom of the Preferences screen. As long as you have entered all your bills, and you are paying your vendors, filing your taxes for 1099s is easy.
- Setting up a new company file
- Working with the chart of accounts
- Adding bank accounts and credit cards
- Adding service or inventory items
- Setting up sales tax
- Adding customer, vendor, and employee profiles
- Creating estimates and purchase orders
- Invoicing customers
- Receiving payments
- Recording deposits
- Handling refunds and credits
- Paying employees
- Banking online with QuickBooks
- Sharing QuickBooks with others
- Running reports