Use this screen to create the information that is used to print 1099s. You must print 1099s for all vendors who received $600.00 or more in rents or medical, other, or non-employee compensation (or $10.00 or more in royalties) for the year. Run the Create 1099 Information process to create 1099 information for all vendors designated as 1099 vendors. This gives you the opportunity to ensure that all 1099 vendors were charged the correct amount of 1099 income. However, when you print (not create) 1099s, only vendors who received 1099 income will be included on the 1099s. You can select a vendor for 1099 status by selecting the Print 1099-MISC Form checkbox in the 1099s subtask of the Maintain Vendors screen.
1099 is the name of the form used to report vendor payments to the United States' Internal Revenue Service. 1099s are required for payments made to for-profit, non-incorporated organizations (or persons) doing business in the United States.
This process uses dynamic worktables. Because these tables are user-specified and will be deleted after the process is over and data has been transferred to a permanent table, each user can only run one Create 1099 Information process at a time. Multiple users, however, can create 1099 information simultaneously, as long as they are logged in under different user names.
Costpoint uses the following process to calculate 1099 income (examples of this process follow). The creation program first goes to the Vendor Check History table where it identifies all the pay vendors in the range that have had payments for the current year. It eliminates non-1099 vendors. The program then identifies which checks were paid to these pay vendors in both the current year and in prior years. This allows the creation process to account for partial payments that might have occurred in two different years; for example, if a $40 check was paid on a $100 voucher in 2003, and a $60 check was paid on the same voucher in 2004. After the program totals the amounts of these checks by voucher, it retrieves all voucher line amounts containing a "Y" in the 1099 column from the Voucher Line Account History table and totals the 1099 amount of each voucher. Once these amounts are totaled, the process identifies the cash organizations from which the 1099 vendors were paid, and uses these cash organizations to map the pay vendors back to the proper company.
At the end of the retrieval process, the program has three amounts from which to calculate 1099 income - the total amount of all current year checks by voucher, the total amount of all prior year checks by voucher, and the total amount of all 1099 lines on the voucher. In the case of partial payments on vouchers that include both 1099 and non-1099 income, Costpoint always assumes that 1099 income is paid first. Therefore, the system assumes that any prior year payment was made as 1099 income and was recorded on the 1099 for that year. To avoid overcharging, the system subtracts any prior year check amounts from the total amount of current year income. Then it compares this amount to the total amount of the current year checks, and uses the lower number as 1099 income. By using the lower amount, Costpoint ensures that only income received by the vendor (the current year check payments) is counted as 1099 income, even if the amount of income listed on the voucher is greater than what was paid. If the current year's check amount is greater than the total 1099 income, using the lower number ensures that only 1099 income is included and non-1099 income is excluded. The system does not create 1099 information for vendors if the amount of income, after subtracting prior year payments, is negative or zero. A negative number or a zero would mean that all 1099 items had already been included on the prior year's 1099. If you need to change or view any of the 1099 information created by the system, you can do so in the Edit 1099 Information screen.
The examples below illustrate 1099 income calculation.
Example 1
|
Voucher: 1099 Income |
$100 |
|
Non-1099 Income |
$ 80 |
|
Total |
$180 |
|
Total Prior Year Payments |
$ 70 |
|
Total Current Year Payments |
$110 |
|
Total |
$180 |
1099 Income = Total Current Year Payments or (1099 Income - Total Prior Year Payments)
Total Current Year Payments = $110
(1099 Income - Total Prior Year Payments) = ($100-$70) = $30
Because $30 is less than $110, Costpoint uses $30 as 1099 income. After the prior year payments, only $30 of 1099 income remained to be paid off in the current year. The other portion of current year payments was made on non-1099 income.
Example 2
|
Voucher: 1099 Income |
$100 |
|
Non-1099 Income |
$ 80 |
|
Total |
$180 |
|
Total Prior Year Payments |
$ 20 |
|
Total Current Year Payments |
$ 60 |
|
Total |
$ 80 |
1099 Income = Total Current Year Payments or (1099 Income - Total Prior Year Payments)
Total Current Year Payments = $60
(1099 Income - Total Prior Year Payments) = ($100 - $20) = $80
Because $60 is less than $80, Costpoint uses $60 as 1099 income. While the voucher included $80 of 1099 income after prior year payments, the vendor only received $60 of that in the current year. The vendor should be taxed only on income received.
In order to create 1099 information, the system accesses check data for vouchers containing payments that are qualified for 1099 status. The process also accesses historical voucher data for 1099 income amounts. Therefore, you must have already recorded checks against vouchers and posted them, before you can print 1099s for those vendors. You must also have mapped your organizations to specific companies using the Maintain Org Elements screen in Costpoint General Ledger, and entered information for your company/companies in the Set Up Company Info screen, also in Costpoint General Ledger. Although you will probably create 1099 information only once a year, you can run this process as often as you like.
Before you can print 1099s, print the 1099 Edit Report or use the Edit 1099 Information screen, you must create 1099 information using this screen.
Use the fields in this group box to choose the taxable entity ID for 1099 creation. Although you can create 1099s for more than one taxable entity at a time, please print 1099s for only one taxable entity at a time. This will ensure that each taxable entity's data will print separately on IRS documents.
Enter the range option or select one from the drop-down box. Range options include "All," "One," "Range," "From Beginning," and "To End." The default option for this field is "All."
Enter, or use Lookup to select, the starting taxable entity ID for the range you want to include. If you selected "All" or "From Beginning" as a range option, this field will be inactive.
Enter, or use Lookup to select, the ending taxable entity ID for the range you want to include. If you selected "All," "One" or "To End," this field will be inactive.
Enter the calendar year for which you want to create 1099s, or choose a year from the drop-down box. Although you can create 1099 information for future years, Costpoint cannot support 1099 formats for future years.
Use the fields in this group box to select a range of pay vendors for 1099 creation.
Enter the range option or select one from the drop-down box. Range options include "All," "One," "Range," "From Beginning," and "To End." The default option for this field is "All."
Enter, or use Lookup to select, the starting pay vendor for the range you want to include. If you selected "All" or "From Beginning" in the Range Option field, this field will be inactive.
Enter, or use Lookup to select, the ending pay vendor for the range you want to include. If you selected "All," "One" or "To End," this field will be inactive.
Select this button on the toolbar to create 1099 information.
During the Create 1099 Information process, the system creates the Vendor 1099 table.
This table includes calendar year, pay vendor, 1099-MISC income, company, cash organization, user ID, and entry date information.
All 1099 screens - Edit 1099 Information, Print 1099 Edit Report, and Print 1099s/Create Magnetic Media - will use this table.