How to Create and Set Up File 1099s in QuickBooks

Form 1099 in QuickBooks is used to track payments to non-employees. Such non-employees include freelancers and non-employee service workers. Form 1099 is issued by businesses for yearly payments (by check, cash, or direct deposit) of $600 or more.

A 1099 account in QuickBooks is accessed to monitor contractor payments. The 1099 account registers qualified entries and ensures correct tax classification. QuickBooks allows 1099 reports to run automatically, promoting consolidated filing to minimize manual labour.

This guide provides comprehensive information on creating and setting up 1099s in QuickBooks. The guide includes setup details for 1099s in QuickBooks Desktop, Online, and QuickBooks Desktop for Mac.

Read on to learn the correct setup for precise 1099 filing in QuickBooks.

How to Create and Set Up File 1099s in QuickBooks Desktop and Online?

For companies handling high sales volumes, skipping 1099 forms results in penalties. QuickBooks 1099 integration guarantees regulatory compliance and monitors vendor payments all year.

Here are the steps to create and set up 1099s in QuickBooks Desktop and QuickBooks Online:

Steps to Create and submit 1099 forms via QuickBooks Desktop

Contractor payments via cash, check, or direct deposit allow payments to be made straight to contractors. However, such payments need Form 1090 filing. QuickBooks Desktop creates such forms, accessing the saved payment information, which results in precise IRS reporting.

Here are the steps create and file 1099s with QuickBooks Desktop:

Step 1: Install the latest QuickBooks updates

To prepare the 1099-NEC and 1099-MISC forms, updating QuickBooks is crucial. Here are the steps to install updates for different QuickBooks versions:

QuickBooks Desktop

1. Head to the “Help” option and choose the tab “QuickBooks Desktop”.
2. Choose the “Update Now” option.
3. Now, click the “Get Updates” option.
4. Close the QuickBooks application.
5. Now, open it again to install the update once more.

QuickBooks Desktop for Mac

Automatically Update

1. In the QuickBooks dropdown, choose the option “Check for QuickBooks updates”.
2. Choose the “Install Update” option in case a new version exists.
3. Choose the “Install and Relaunch” option when notified.
4. When the update is done, QuickBooks for Mac appears automatically.

Manual update

1. Remove the QuickBooks for Mac application.
   • Exit QuickBooks.
   • In the “Finder” menu, choose the “Go Applications” option.
   • Take the QuickBooks icon to the “Trash” application.
2. Install the Current version again
   • Head to the “QuickBooks Downloads and Updates” option.
   • Ensure to choose the right product, country, and edition.
   • Choose the “Search” option.
   • To download the installer file, choose the “Download” option.
   • Click on the .dmg file once more.
   • Take the QuickBooks icon to the Applications folder to complete the installation.
   • To check the update and verify the release number, access QuickBooks and click the keys “Cmd+1”.
3. Recover the company file using QuickBooks.

Install the latest QuickBooks Server for Mac

1. Head to the option “QuickBooks Server” beside the Apple logo.
2. Choose the “Check for QuickBooks Server updates”.
3. Choose the “Install Update” option.
4. Choose the “Install and Relaunch” option.

Step 2: Create your 1099s in QuickBooks Desktop

Here are the steps to create 1099s in QuickBooks Desktop:

1. Head to the “Vendors” section and choose the “1099 Forms” option.
2. Now, click the “Print/E-file 1099 Forms”.
3. Take a backup.
4. Choose the “Get Started” option for the 1099 form. Repeat the steps for the other form to create both the 1099-MISC and 1099-NEC forms.
5. Choose vendors that require a 1099 form.
6. Now, choose the “Continue” button.
7. Check vendor details and change any incorrect information. Then, click the “Continue” button.
8. Allocate payment accounts to the right 1099 form. Next, map every account to a single form only. Restore default IRS limit settings when notified.
9. Now, click the “Continue” button.
10. Verify the added and removed payments for report accuracy. Now, choose the “Continue” button.
11. Verify vendor names and the total amount to report. Check with vendors not meeting the reporting limit to confirm accuracy by accessing the Summary Report.
12. Choose the “Continue” button to move ahead.
13. Select whether to e-file or print 1099 forms. In case the user wants to e-file the 1099s, complete the steps shared below.

Steps to Create and Submit 1099s with QuickBooks Online

QuickBooks Online is compatible with contractor payments and 1099 filing. Contractor Payments need to be included when contractors are paid directly. QuickBooks Online Payroll should be added when handling both contractors and employees becomes difficult.

Here are the prerequisites for creating a 1099 with QuickBooks Online:

• For any independent contractor who paid USD 600 or more, a 1099-NEC should be filed. Furthermore, when federal income tax is not cleared, a 1099-NEC should be filed.
• Payments via debit card, credit card, PayPal, or gift card are not accepted.
• Implement IRS rules to file 10 or more W-2s, 1099s, or federal forms that need e-filing.

Step 1: Steps to Create the 1099s

There are two options to create the 1099s. Either allow QuickBooks to create it or prepare with QuickBooks help.

Here are the steps to create the 1099s:

Allow QuickBooks prepare for users

1. Head to the “All Apps” option.
2. Now, click the “Expenses and Bills” option.
3. Now select the “1099s”.
4. Choose the option “Prepare 1099s”.
5. Choose the option “Let”. This will enable QuickBooks to prepare the form and then begin.
   Note: Ensure the company details, like tax ID, name, and address, are correct. Use the “Edit” option to perform any required changes.
6. Choose the option “View Results”
7. Check the 1099s. QuickBooks prepares a recipient list that can be compatible with the 1099 form rules.
8. Choose the dollar amount for every individual contractor to check payment information. Check active accounts and their connected 1099-MISC or 1099-NEC boxes. Viewing the excluded amounts is possible.
9. Choose the option “Update account mapping to 1099 boxes” to modify the 1099-MISC or 1099-NEX boxes.
10. When all is set, choose the option “I have reviewed and ready to file”.

Step 1: Create with QuickBooks help

Create the 1099s for printing or e-filing by arranging payments and contractors correctly. The interface of QuickBooks may vary. This is why the in-app Search bar should be accessed. 

Here are the steps to create with QuickBooks help:

1. Head to the “All apps” option and then click the “Payroll” option.
2. Choose the “Prepare 1099s” option.
3. Choose the option “I’ll do it myself”.
4. Next, click the “Get Started” option.
5. Ensure the company details like email, tax ID, name, and address are accurate. It is crucial that the information aligns with tax notices from the IRS.
6. Choose the “Edit” button to perform any modifications.
7. Choose the option “Confirm info and get started”.
8. Choose the tab “Select accounts”. Now, select or verify the accounts accessed for 1099 payments or expenses.
9. Now, click the “Add” button.
10. Beside every account added, choose the 1099-MISC or 1099-NEC boxes. These boxes signify the kind of payment made to the contractor.
11. Choose the “Next” button.
12. On the tab for “Tracked for 1099”, add a check mark beside every contractor who needs to get a 1099 form. Ensure the personal information of the contractor is accurate.
13. Choose the “Edit” button to perform any changes.
14. In case a contractor is not available, choose the tab “Not tracked for 1099”.
15. Choose the option “Add to tracked list” to include the contractor in the “Tracked for 1099” tab.
16. Now, click the “Back” button.
17. Check the “Reportable total” amount for every contractor chosen.
18. Now, click the “Next” button. Sometimes, the expected payments from the “Reportable Payments Only” dropdown are not visible. In such a case, select the option “Non-reportable payments only”.
19. Choose the “Preview” option to check every 1099 and check the amount in every box.
20. Choose the “Continue to 1099-MISC” option to check the 1099-MISC forms.
21. Choose the “Next” button and click it.
22. Now, select the filing method. To e-file the 1099s, choose the option “Continue to E-File”.
23. To print and mail the forms to yourself, choose the option “I’ll print and mail.”

QuickBooks Online Accountant

Access the automated 1099 prep to generate 1099s for clients in the QuickBooks Online Accountant file. Automated 1099s provide users with the following benefits:

• Submit all client findings under one platform.
• Download finished forms in bulk.
• Check the eligibility and status of all the clients.

Step 1: Start with QuickBooks Online Accountant

1. Choose the option “1099s” from the “Your Practice” screen.
2. Now, click the “E-file” option.
3. Check the expected 1099 filings and the unavailable W-9 details for all the clients.
4. Choose the “Sync” button to ensure the current estimates are used.
5. Choose the “Review and File” option for forms prepared for filing in the “Actions” column. To change W-9 details, choose the “Manage W-9”option. To erase the alerts, click the “Edit company info” option.
6. Choose the “Go to client view” option to exit the client station and handle the 1099 form for the client.

Step 2: Review the filing status of the client

View and download the 1099 form for every client to check the filing status using the following steps:

1. From the “Your Practice” dashboard in QuickBooks, choose the 1099s.
2. Now, click the “Completed Forms” option.
3. Choose the “Download” option to get for all the clients.
4. Choose the “Review and File” option or the “Go to client view” option. These options will help to check more information

Step 3: E-file your 1099s

Once the information is provided, e-file it using these steps:

1. Choose the e-file option once the 1099s are ready.
2. Now, confirm the 1099s.
3. Complete the on-screen guidelines to finish the state and federal e-filing, if applicable.
4. Select the delivery option for the contractor copies when notified. Additional charges may be applicable for 1099 forms to be emailed.

• In case this option is not visible, the contractors get online access to the1099s when they are included in QuickBooks.
• When an email address is incorrect, rectify it in QuickBooks.

5. Add the billing details when notified.

Note: For records, copy A of Form 1099 is used. Ensure not to print or mail this form to the IRS.

Step 4: Review the filing status

Once the 1099s are filed with the IRS, the filing status is notified via email. QuickBooks Online allows users to review the filing status anytime using the following steps:

1. Head to the “Taxes” option.
2. Now, click the “1099 filings” option.
3. In the “Filing” status segment, check the position of the e-filing.
4. Choose the “View 1099” option to check a PDF copy.

You may also read this: How to Set Up and Print 1099 Vendors in QuickBooks

What are 1099 Forms?

It is critical to understand the two major 1099 forms before using QuickBooks. There is Form 1099-NEC, which is the one used by businesses to report all payments of $600 or more to independent contractors for services. Other forms of miscellaneous income like rent, royalties, and prize,s are reported with Form 1099-MISC.

These forms are due before the deadline, which is January 31st for 1099-NEC and March 1st if filed on paper or March 31st if e-filed for 1099-MISC. Businesses have to submit these forms to the IRS and distribute copies to the recipients.

Conclusion

QuickBooks Desktop and Online can easily manage 1099 tax reporting and comply with IRS guidelines. Following the correct steps ensures efficient production and timely filing of 1099 forms, helping businesses avoid penalties. Tax laws and regulations can be complicated, and mistakes in reporting may result in fines. If you’re unsure about any part of the 1099 documentation, it’s best to consult a professional accountant or tax advisor. Professional support ensures accurate data and smooth tax filing while meeting regulatory requirements.

Frequently Asked Questions