We’re approaching 2021, but 2020 still has a surprise in store for QuickBooks users: the IRS released a new form to report payments made to independent contractors or others that provide services in a capacity other than as an employee. We’re alerting our readers to this change since we found out that some of our clients have already purchased the tax form that used to be used for this purpose and saw there was no longer a box to report nonemployee compensation.
Previously, payments not made by credit card of at least $600 to attorneys, independent contractors, or directors, among others, were required to be reported on Form 1099-MISC. Now that form is used for payments of rents, royalties and other payments that are not non-employee compensation payments.
A new tax form means a new way of reporting and we’re pleased to let our QuickBooks users know Intuit has already made the changes for their supported versions of QuickBooks Desktop and QuickBooks Online. If you’re using QuickBooks Online, you always have the most recent version of that application. If you’re using QuickBooks Desktop, it’s important to be up to date on a supported version to generate Form 1099-NEC.
- First of all, we strongly suggest that you read the new IRS publication, “2020 Instructions for Forms 1099-MISC and 1099-NEC” to understand what’s involved.
- Next, if you are on a supported version of QuickBooks, you will find a link to documentation on your Home Page that explains the changes you will need to make to your program to correctly track and e-file the correct forms. You may directly access this link at: https://quickbooks.intuit.com/learn-support/en-us/1099-misc-payroll-forms/1099-misc-box-7-nonemployee-compensation/00/370756
- Finally, if you haven’t already obtained the tax information of independent contractors or other non-corporate or legal service providers, send them a Form W-9 to get that needed information for your records.
- Finally, Forms 1099-NEC for the 2020 tax year are required to be filed with the IRS on or before 2/1/21, using either paper or electronic filing procedures.
- If you have any questions about this new form itself, or with filing it, we strongly suggest that you check with your accountant or financial advisor for details.
Accounting programs such as QuickBooks are updating their programs to handle filing requirements for Form 1099-NEC, but they aren’t the only ones. All accounting programs that support accounts payable and payroll are making service releases available for their supported versions of programs and applications. If you haven’t upgraded your accounting program recently, now is the time to do so with all the changes in tax laws and regulations. If you have any questions about using QuickBooks (or any other accounting program we support) to generate these forms, please call us as your software consultants. We’re here to help.
Dana Riel is President and Founder of Business Solutions, Inc., serving the Washington, D.C. metropolitan area since 1985. Her firm is the authorized training center for the region for Time Matters and PCLaw by PCLaw|Time Matters, PLLC; Timeslips and Peachtree Accounting by Sage Software; and QuickBooks by Intuit Corporation. As a trainer, Dana has provided training services to organizations such as the DOD Defense Logistics Agency, Judge Advocate General’s Office (JAG)/Department of the Navy, University of the District of Columbia School of Law, U.S. Department of Commerce and the U.S. Department of Veterans Affairs, as well as with small‐ to mid‐size law firms in the Baltimore‐Washington D.C. area. In 2009, she participated in the series of day‐long seminars sponsored by the District of Columbia Bar Association Practice Management Section, titled “Basic Training: Learn About Running a Law Office”. Ms. Riel also served as an Adjunct Professor in Georgetown University’s Paralegal Studies Program, having taught the course, “Legal Ethics/Legal Technology” in 2009; and “Legal Technology” for the Spring and Summer Semesters of 2010. She presently serves on the Advisory Board for PCLaw|Time Matters, PLLC.