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Title: 1099-MISC functionality in Unanet

Brief description:

The 1099-MISC related features in Unanet include the following:

  1. Account Payable System Property, "Enable 1099 Functionality" – Enables or hides 1099-related functions in Unanet.
  2. Account level 1099 Categories  Determines in which 1099 box payment amount should be included. If not specified, the amount will not be included in the 1099.
  3. Payment Method "Include in 1099" flag – Determines whether a payment document is eligible to be included in a 1099.
  4. Organization 1099 tab  Records 1099 information for the Organization.
  5. 1099 Vendor Payment Export – Exports 1099-MISC related payments for the selected payment document date range.

Vendor Payments may be subject to 1099-MISC reporting as detailed in the IRS' Instructions for Form 1099. The most common (although not the only) requirement for Unanet customers is that they report compensation amounts paid to non-employees who are not paid through a corporation. Note that whether or not to include a vendor payment in a particular 1099 is based upon when the payment is made (the vendor payment document date), not when the work is done or the payment is posted.

What’s covered in this document:

Tips

  • Make sure to accurately enter vendor invoices to accounts so that the line items accurately reflect whether the amounts should be included in a 1099-MISC.
  • Form 1099-K: Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC.

  • You can attach the W-9 from the vendor to the Organization record with the Attachments feature in the Organization screen.

  • Check the "Include Only 1099 Vendors" in the Organizations Search tab List Options section to return only 1099 vendors in the list.

  • Check the "Show 1099 Category" checkbox in the Accounts Search tab to display the 1099 Categories in the Accounts list.

Setup

  1. "Enable 1099 Functionality" Property: Checking this checkbox in Admin > Properties > Financials > Accounts Payable enables all of the 1099 functionality if you have a Financials license. 

  2. Account setup: Select a 1099 Category in Admin > Setup > Account for any accounts whose charges should be included in a 1099-MISC. The category selected will determine the 1099-MISC box that will be populated with amounts charged to the account. If a 1099 Category is not selected for an account, charges made to the account will not be included in the 1099. Any qualifying account that is used in a detail row of the Vendor Invoice should have the 1099 Category set. For example, if you have subcontractors filling out Unanet timesheets, you may want the "Labor Cost Offset – Subcontractors" Account set with the appropriate 1099 Category.

  3. Payment Method setup: Check the "Include in 1099" box for any Payment Methods that should be considered for 1099s. If the checkbox is not checked for a Payment Method, vendor payments with that Payment Method will not be considered for the 1099 (see 1099-K tip above).

  4. Organization setup: 

    1. Enter 1099-related information in the 1099 tab of Organizations Profile.

      1. 1099 Vendor checkbox: Indicates that the organization should be considered in the 1099 export.

      2. Recipient Name (optional): The person's actual name should be entered here if the organization name is a dba or "doing business as" name (e.g. if the organization name is "Fred's Consulting" and the person's actual name is Frederick Meeks, then Frederick Meeks should be entered here). If this value is left blank, then the Organization name is assumed to be the recipient name for 1099 purposes.

      3. Recipient E-mail (optional): This is the email address to which the 1099 information can be emailed if authorized by the recipient and supported by the 1099 service provider.

      4. Federal Tax Id Type: Valid values include

        1. EIN  Employer Identification Number

        2. ITIN  Individual Taxpayer Identification Number

        3. SSN  Social Security Number

      5. Federal Tax Id: 9-digit tax id with no formatting characters

    2. Organization Profile left menu can store attachments and addresses.

      1. Attachments: Here you can store W-9s, authorizations to email 1099 information, and any other documents related to 1099 processing.

      2. Addresses: The default Remit To address for the 1099 vendor organization is used by the 1099 export as the address.
  5. Export Templates for 1099:
    1. Select a 1099 vendor to use to file the 1099s. Unanet provides standard export templates for the Track1099 software vendors. If you elect to use another vendor, the Unanet-supplied export templates may need to be modified to meet the specific requirements of your selected vendor.
      1. Track1099 (https://track1099.com/)
    2. Import the 1099 export templates you plan to use. Note: Do not open either of these files before importing, as this will cause formatting issues and the files will not import correctly into your Unanet system. Once you click on each of the 1099 files, they should be in your Downloads folder.
      1. Document Level 1099 Detail.csv: This export provides a summary of the 1099 amounts by vendor payment for all qualifying vendor payments (see Payments that will be included above). Note that the effects of any application documents will be included in the original document's values (e.g. they will be treated as an extension of the original document, not as separate documents in their own right). This file will contain approximately 30 columns.
      2. Track 1099.csv: This file will contain approximately 46 columns.

Transaction Processing

The 1099 exports information related to vendor payments that occurred during the specified time period (typically a calendar year, although it is theoretically possible that an organization may process 1099s more frequently).

The transaction documents that affect 1099s include:

  1. Vendor Invoice: Details included in a Vendor Invoice determine where some or all of a vendor invoice will be treated as able for inclusion for 1099 processing when paid via a vendor payment. This is based on whether the Details are charged to accounts associated with a 1099 category.
  2. Expense Report: The expense report line items included in an Expense Report determine where some or all of an Expense Report will be treated as able for inclusion for 1099 processing when paid via a vendor payment based on whether the expense report line items are charges to expense type associated with accounts associated with a 1099 category. Note that only expense reports that go through the Created Vendor Invoices from Expense Reports process will be considered for 1099s.
  3. Vendor Payment: Vendor payment documents are the driver of the 1099 process.
    1. Payments that will be included:
      1. Vendor for the payment is a 1099 vendor.
      2. The document date of the vendor payment is included in the calendar year for which the 1099s are being created. Note:  it is critical that the document date reflect the date that the payment was actually made in order to get a good cutoff for 1099 purposes.
      3. The vendor payment Payment Method has the "Include in 1099" box checked.
    2. 1099 amounts:
      1. Sources
        1. Vendor Payment Details
          1. 1099 amount: Amount from Details grid line
          2. 1099 box: Based on 1099 category of Account from Details grid line
        2. Paid Documents
          1. Regular Vendor Invoices
            1. 1099 amount: Amount(s) from Details grid line(s) of the vendor invoice paid by the vendor payment
            2. 1099 box: Based on 1099 category of Account from Details grid line(s) of the vendor invoice paid by the vendor payment
          2. Vendor invoices created by the Create Vendor Invoices from Expense Reports
            1. 1099 amount: Amount(s) from expense report line(s) of the expense report from which the vendor invoice was create that was paid by the vendor payment
            2. 1099 box: Based on 1099 category of the account associated with the Expense Type(s) of the expense report line(s) of the expense report from which the vendor invoice was create that was paid by the vendor payment
        3. Application Documents
          1. Application documents are treated as extensions of the original vendor payment document and will be considered only in conjunctions with the original vendor payment as follows:
            1. The document date of the original document determines whether the payment is included in a 1099 export. All posted application documents related to the original document will be included when determining the 1099 breakdown of the original vendor payment regardless of the post date of the application document.
            2. Detail and Paid documents included in an application document are evaluated for 1099 purposes the same as those included in the original document.
        4. Included Customer Payments
          1. Included customer payments are not considered as a source when evaluating 1099 amounts. This means that the applied original vendor payment will end up with 1099 amounts less than the amount of the payment and the vendor payment in which the vendor payment was applied will end up with 1099 amounts greater than the vendor payment amount. The net amounts offset one another.
      2. Partial Payments
        1. Partial payments of vendor invoices will result in the pro-rata 1099 amounts for the included vendor invoices being treated as includable in the 1099 (e.g. if a vendor invoice for $1,000 contained $900 of 1099-able charges and $100 of non-1099 charges and a partial payment of $500 was made on the vendor invoice, the 1099-able amount for 1099 reporting purposes would be $450 and non-1099 amount would be $50).
      3. Unapplied Vendor Payments
        1. If a vendor payment has an unapplied balance as of the time the 1099 export is run, the unapplied balance will not be included as a 1099 amount. These amounts, if any, will need to be manually adjusted as appropriate when creating 1099s in the third party system.

1099 end of year process

  1. Review 1099 information in Unanet.
    1. Make sure all of the Setup information is correct.
    2. Run the Document Level 1099 Detail export for the calendar year. Note that this can be done any time during the year to review the 1099 information related to 1099 vendors. Review any amounts included in the following columns:
      1. Unapplied Payment Amount: This represents the unapplied balance of the payment. This amount should always be zero prior to filing 1099s if possible as unapplied amounts are not included in any of the 1099 amount categories as the amount is not related to any accounts that could contain a 1099 category. If it is not possible to zero out these amounts for some reason (e.g. invoices to which the payment will be applied have not been received), the 1099 export will need to corrected manually as necessary.
      2. Non-1099 Amount: This represents payments made to 1099 vendors where the items paid were not associated with an account that was associated with a 1099 category. These should be reviewed and corrections made as necessary. Corrections might include associating the account with a 1099 category or correcting the account charged to put it into the correct account. Note that corrections should normally be made by transferring charges between accounts in Vendor Payment document details as only Vendor Payments are considered by the 1099 process. For example, corrections via Journal Entries or in a vendor invoice (unless it is subsequently included in a qualifying vendor payment) will not affect the 1099 export.
      3. 1099 box amounts: Items included in the 1099 box amounts can be corrected using the same process described for the Non-1099 Amount above.
  2. Run the 1099 export using the export template designed for your selected 1099 vendor.
    1. Review for obvious issues (optional: validation is performed as part of the upload process by the 1099 vendor software).
    2. NOTE: the export files contain extra header values that are ignored by the 1099 vendor import processes - this will not cause a problem with the imports.
  3. Import the 1099 export information into the 1099 vendor software.
    1. Track1099
      1. Log into Track1099 (follow instructions on website if you need to set up an account).
      2. Navigate to Track 1099 1099-series.


      3. Add Payer (filing company information).
      4. Click "Next Step: many Recipients via CSV" from within the Payer record.
      5. Select file to import by clicking Select File button.
      6. Click Import CSV button after selecting file.
      7. Follow remaining steps for processing 1099s  see https://track1099.com/info/how-it-works for Track1099 online help resources.


1099 Export Templates

Note: Do not open either of these files before importing, as this will cause formatting issues and the files will not import correctly into your Unanet system. Once you click on each of the 1099 files, they should be in your Downloads folder.

Track 1099.csv

Document Level 1099 Detail.csv


Additional Information

KC - Webinar - CSM Webinar - 1099 Processing in Unanet for Financial Managers

Help Docs - Organizations (This link contains all related links, two of which are below.)


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