Tax Time: Working with Forms 1099 and 1096

When tax time looms large, it’s easy to freak out—suddenly you remember that on top of all the other tasks you must complete, you need to print and send out 1099-MISC forms for all your contract service vendors. Form 1099s need to go in to the IRS, on paper and organized with a form 1096 if you have less than 250 of them to send. If you’ve got 250 or more form 1099s to send, you’ll need to submit them electronically to the IRS, though you’ll still need to print and send them to each of your vendors.

 

The good news: it’s easy to set up QuickBooks for Mac to gather all the information the IRS requires on 1099 forms.

First set up your QuickBooks Preferences to track the specific information for each box on the 1099 forms that applies to your business accounts. (Choose QuickBooks > Preferences > 1099s.) The accounts you select should be accounts you use to track expenses related to Form 1099-MISC. Typically, the accounts are expense accounts. If you need to, you can also associate liability or asset accounts with 1099 categories. Need a little more know-how about what to track for your 1099s? Read through these instructions on the IRS web site.

Hot tip: For many businesses, the only relevant item you need is Box 7: Non-employee compensation, and a common account connected to this box is Payments to Subcontractors.

Next, head for the Vendor Center and set up your 1099 vendors. You can do this as soon as you add a new vendor’s info into QuickBooks—the sooner the better. It’s as simple as clicking the 1099 checkbox and adding the vendor’s tax ID on the Additional Information tab. After you do this, each time you make a payment to a 1099 vendor, QuickBooks automatically adds the amount to the total you must report on the vendor’s 1099-MISC form.

Any time of the year, order up blank 1099-MISC and 1096 forms from the IRS, so you’ll be prepared.

Come tax time, QuickBooks really shines. Use the preexisting 1099 Summary and 1099 Detail reports in the Report Center to be certain that your vendors’ information is correct before your print the forms. (Tip: Block out some time to verify that all your 1099 information is correct before printing.)

After you’ve verified that all the information QuickBooks has is correct, follow the instructions in the online Help and use the blank forms to print out all 1099-MISC and 1096 forms. Remember that you need to print two copies of each 1099-MISC—one for the IRS, and one for your vendor. You only need one Form 1096—it’s the summary form that you submit to the IRS along with all your 1099s, and a number of other forms. For more information about what Form 1096 is all about, complete with instructions, go to the IRS web site  at http://www.irs.gov/pub/irs-pdf/f1096.pdf.

Hot Tip: Starting with tax year 2011, the IRS has changed the layout of the 1096 form. If you use QuickBooks 2009 or earlier, you’ll need to fill out your 1096 form by hand this year. Be sure to put the X in the 1099-MISC box, not the 1099-K box.

If you’ve got more than 249 1099 forms to submit to the IRS, you must transmit them electronically. IRS Publication 1220 describes the process for electronically filing form 1099s, and several other forms you may be filing at tax time.

Need more tax time help? Check back often with Little Square—we’ll have more articles aimed at helping small businesspeople spend less time getting their taxes done.

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About Liz Hamill Scott

Liz Hamill Scott is the newest member of the QuickBooks for Mac team, but she's no stranger to QuickBooks. For the last few years, Liz has used QuickBooks for Mac to track the many expenses she incurs as a travel, food, and lifestyle writer. The author of The Imperfect Traveler's Guide to Traveling With Pain, five Moon Handbook travel guides to California and numerous magazine, newspaper, and blog articles, Liz loves advocating for travelers with hidden disabilities and takes the business of being a sole proprietor seriously. You can find Liz on the web at travelswithpain.com. See all of Liz's articles

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