Learn what you need to do in QuickBooks Online and QuickBooks Desktop if you need to file both a 1099-MISC and 1099-NEC. The information in this post is provided by Intuit.
What's new for tax year 2020?
The IRS separated nonemployee compensation onto a new form called the 1099-NEC for tax year 2020. Because of this, the IRS revised Form 1099-MISC and rearranged box numbers for reporting certain income.
With QuickBooks you can elect to print and e-file your 1099-MISC and/or 1099-NEC. To create these forms this year, there are a few steps you can take now to ensure your chart of accounts are properly mapped for both the 1099-MISC and 1099-NEC forms and reports.
Learn more about filing your 1099s this year. You can download the new form 1099-NEC here.
What do I need to do before I e-file both forms?
IMPORTANT: You only need to follow the steps below if you need to file both a 1099-NEC and a 1099-MISC. This is determined by which types of boxes you select when you create your 1099s in QuickBooks. Most businesses only select “non-employee compensation” for contractor payments. In this case, no adjustments are needed, and you do not need to continue with this article. However, if you do need to select other types of payments to report, you’ll need to adjust your accounts and payments to prepare your books. Follow this article to update your company file.
If you need to file both forms
Due to the introduction of the new form, if you need to file both the 1099-NEC and the 1099-MISC, you will need to create a new expense account for all the accounts that will be reported on the 1099-NEC. A single account can only be used for each form. Then, once you have set up your new expense account in your QuickBooks file, you will need to use a journal entry to move the amounts from one account to another. We'll walk you through how to do this. It should take under 30 minutes.
For example, if you need to file both forms and you only have one set of accounts you have been paying your vendors from, you will need to create a new list of accounts to report amounts to the new 1099-NEC form. You will then need to create journal entries to move the amounts from one account to another.
For more details about the new 1099-NEC form and instructions, visit the IRS for additional information.
Set up QuickBooks for the 1099-MISC and 1099-NEC forms
If you paid 1099-MISC and 1099-NEC contractors out of the same account then you will need to adjust your chart of accounts to ensure each form has accounts set up specifically for it.
Then, you can either create a journal entry to move amounts to show in the newly created 1099-NEC accounts or you can edit existing payments to the new accounts.
Follow steps for your version of payroll.