Issue/Symptom/Question

2025 1099 Guide - For 1099-MISC and 1099-NEC

Applies To

Penta for Windows

Accounts Payable End-of-Year

Resolution/Fix/Answer

Introduction 

One of the benefits of your annual license fee is receiving the modifications Penta Software makes to the software for 1099 compliance issues. 

This 1099 Guide includes information related to tax year end, update installation, 1099-MISC processing and 1099-NEC processing. 

PENTA requires that all customers submit 1099-MISC and 1099-NEC information to the IRS electronically. PENTA does not support paper filing to the IRS and the IRS no longer accepts diskette and tape submissions. 

PENTA supports a 1099-MISC and 1099-NEC laser PostScript® form for recipient and employer paper copies. 

 Notes: 

• PostScript is a page definition language for laser printers, created by Adobe Systems, Inc. Printer manufacturers sometimes include either a licensed copy of PostScript from Adobe® or a PostScript emulation program to accompany their printer. The advantage of these printers is that they can print graphics, which minimizes form/printer alignment problems, and allows the graphics to vary, depending on the data requirements. 

• The use of PostScript forms minimizes printer alignment problems experienced with regular laser and continuous forms. 

• Printing on a PostScript form requires a PostScript-compatible printer. 

1099 Process Checklist 

To run your end of year 1099 tax reporting process, use the following checklist. You can complete steps 1 –5 at any appropriate time prior to installing the year-end software update (Step 6). Only create 1099s (Step 7) after installing the update. 

1. Apply to File 1099’s Electronically 

Applying to the IRS to File Electronically 

PENTA supports electronic filing of Form 1099-MISC and 1099-NEC to the IRS. Printing of forms for paper filing to the IRS is not supported. 

The IRS requires that you apply for approval to file electronically. If you have not filed 1099s electronically in previous years, you need to complete and submit IRS Form 4419: Application for Filing Information Returns Electronically (FIRE). This form is available from the IRS website (www.irs.gov) and from the IRS at 1-866-455-7438.  

You can submit Form 4419 anytime during the year to the IRS Martinsburg Computing Center; however, you must submit it at least 45 days prior to the due date of the return. 

Applying to the IRS to Participate in the 1099 Combined Federal/State Filing Program 

You must request approval to participate in the 1099 Combined Federal/State Filing Program by submitting an electronic test file coded for this program to the IRS. PENTA codes a 1099 file as a test file when the Electronic File Test Submission flag on the 1099 Generation window is set to Y. 

 Refer to the Penta Learning Center video Combined 1099 Filing State Information to review this setup. Link here: Penta Learning Center - Combined 1099 Filing State Information 

 NOTE: Form 1099-NEC is a part of the Combined Federal/State Filing (CF/SF) Program as of 2021. 

Indicating IRS Approval in PENTA 

The IRS approval process includes issuing a Transmitter Control Code (TCC). PENTA uses this code in the 1099 electronic file generation process. For information on entering the TCC into PENTA, refer to this Guide’s Verify Federal Data section. 

Within PENTA, you must indicate you received approval to participate in the 1099 Combined Federal/State Filing Program in order for electronic submission files to be created in the combined filing format. For information on indicating approval to participate in the 1099 Combined Federal/State Filing Program, refer to this Guide’s Verify Federal Data section. 

Note: PENTA users should review IRS Publication 1220, Specifications for Electronic Filing of Forms, or other publications to ensure familiarity with IRS requirements and procedures for electronically filing Form 1099-MISC and 1099-NEC. 

2. Order 1099 Forms 

PENTA produces at least one copy of the 1099MISC form for each vendor designated as a 1099 recipient that received payments in the tax year where the 1099 Earn Cd was anything other than 7 (nonemployee compensation).  

PENTA produces at least one copy of the 1099NEC form for each vendor designated as a 1099 recipient that received payments in the tax year where the 1099 Earn Cd was equal to 7 (nonemployee compensation) 

PENTA produces a 1099MISC and/or 1099-NEC form for each legal entity OU Id that paid the vendor. 

PENTA supports electronic filing of 1099-MISC and 1099-NEC information to the IRS. Paper filing to the IRS is not supported. 

PENTA supports a 1099-MISC laser PostScript form for 2021 recipient and payer copies. 

PENTA supports a 1099-NEC laser PostScript form for 2021 recipient and payer copies. 

 You can order form 1099-MISC and 1099-NEC with the form numbers listed below from Nelco Solutions. You can also order from any vendor supplying a form that conforms to the following layout and includes current year recipient instructions. Note that form numbers vary by vendor, and that the numbers mentioned below are specific to Nelco Solutions. To ensure you receive forms in time to meet year-end obligations, check with individual vendors regarding deadline dates for ordering. 

You might want to increase the quantity of forms you order to: 

• Allow reprinting of spoiled forms. 

• Provide forms to the same vendor from multiple LE OU Ids. 

• Provide forms to the same vendor to report state withholding for multiple states 

• Provide forms to the same vendor that would receive both 1099-MISC and 1099-NEC 

1099 PostScript Laser Form 

PENTA supports printing of 1099-MISC and 1099-NEC PostScript laser forms on Nelco Solutions Forms #B99PERFMI05 (1099MISC) and #B99PERFNI05 (1099-NEC), or on any other form that matches this layout and includes recipient instructions. Form #B99PERFMI05 (1099MISC) is a blank 8½ x 11-inch sheet, perforated horizontally with 3 parts per page with 1099-MISC recipient instructions printed on the back. Form #B99PERFNI05 (1099-NEC) is a blank 8½ x 11-inch sheet, perforated horizontally with 3 parts per page with 1099-NEC recipient instructions printed on the back. The PENTA 1099 process prints 1099 boxes as well as data on these forms.  

 If you are ordering from Nelco Solutions, refer to the Nelco Solutions/Penta Software partner ordering page 

 #B99PERFMI05 (1099MISC)  

#B99PERFNI05 (1099-NEC) 

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8 ½ x 11-inch sheet, 3 up style 

The 3up Blank 1099-MISC and 1099-NEC Forms (with Instructions) are the preferred Nelco Solutions forms for PENTA Customers. Only the front is blank. The IRS requires users of such forms to provide “appropriate instructions to the form recipient similar to those on the back of the official IRS form, to aid in the proper reporting on the form recipient’s tax return.” With our move to Nelco Solutions, this requirement is met for you. 

1099MISC Box Descriptions 

Below is a description of each box of the 1099MISC form. 

1099NEC Box Descriptions 

Below is a description of each box of the 1099NEC form.  

3. Verify Required Information 

Process 

3.1 Set Minimum IRS Reporting Amount for 1099 Creation 

The IRS requires you to produce 1099 forms only for vendors whose payment total during the calendar year equals $600 or more. In PENTA, you can define the $600 minimum so that PENTA does not produce 1099MISC or 1099-NEC forms for vendors whose payments do not exceed the defined limit.  

The defined limit cannot be entered separately for the 1099-MISC and 1099-NEC. The defined limit is used for both 1099 forms. 

The 1099-MISC and 1099-NEC do not share the same limit. Each calculates separately. Example: If the limit is set to $600 and there is $400 of 1099-MISC payments reportable and $400 of 1099-NEC payments reportable then neither form will print. 

A. Enter the $600minimumvendor payment. 

System Management > System Rules > System Configuration 

1. Click the toolbar’s Enter Query button. 
   PENTA runs a query that returns your company’s information. 

2. Open the Accounts Payable (A/P) tab. 

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3. In the Print 1099s Only If Amount Exceeds field, enter $599.99. 

4. Click the toolbar’s Close Window button to save the minimum payment setting. 

3.2 Set State Minimum Reporting Amount for 1099-MISC Creation 

Reporting requirements for the Combined Federal/State Filing Program vary by state. Refer to IRS and state publications for current information. In PENTA, you can define each participating state’s minimum reporting amounts to instruct PENTA to produce 1099MISC forms for vendors whose payments exceed the defined limit. 

A. Enter a state minimum vendor payment amount. 

Accounts Payable > Year End Processing > 1099 Processing > Combined 1099 Filing State Information 

1. Query a desired State. 

2. Enter an Effective Date. 

• PENTA populates the Combined 1099 Filing Participant field with Y, indicating records for this state will be included in combined format files for the tax year in which the Effective Date falls. 

• Records will also be included in subsequent tax year files, unless you enter a deactivating record by entering a new Effective Date and overriding the participant flag to N). 

3. Enter a Minimum Amount. 

4. Repeat Step 3.2.A for each participating state you report to. 

3.3 Verify Payer Information 

A. Verify payer name, address, ZIP code, and telephone number for 1099 forms. 

Although PENTA does not require name, address, and telephone number information during OU setup, the IRS requires it on the 1099MISC and 1099-NEC form. Verify this information is defined for each of your company’s legal entity organizational units (“LE OUs”) before attempting to generate 1099 forms. 

Finance & Accounting > Setup > Organization Units > Organizational Units 

1. Click the toolbar’s Enter Query button once, then open the Legal Entity tab. 

2. Click inside the Federal Id field and then click the toolbar’s Expert Query button.  

3. Click the !Null button, then the OK button. 

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4. Click again on the toolbar’s Query button to execute the query to return LE OU records. 

5. Navigate back to the Setup/Address tab and verify the name, address, and telephone number information for each LE OU.  

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B. Verify federal data.

Finance & Accounting > Setup > Organization Units > Organizational Units > Legal Entity tab 

1. An LE OU pays a vendor. PENTA requires a federal identification number for each LE OU you set up. The Id must be exactly nine digits and in the format 12-3456789.  
   Verify that each LE OU record contains the correct Federal Employer Id. 

2. You are required to submit federal form 4419 to request permission to submit 1099 forms to the IRS electronically. When you receive permission, you also receive a five-character alphanumeric Transmitter Control Code. PENTA writes this code in a record in the electronic file.  
   Verify the Transmitter Control Code (TCC) is correct. 

3. Electronic submissions from participants in the 1099 Combined Federal/State Filing Program must be in the combined filing format.  
   If you participate in the combined filing program, verify that the Combined Fed/State 1099 flag is set to Y. 

Note: Do not set this flag to Y if you have not received approval from the IRS to participate in the combined filing program. 

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3.4 Verify Vendor Information 

A. Verify the Taxpayer Identification number. 

The IRS requires that you make every effort to provide the correct taxpayer identification number. If you do not, the IRS may fine you. The taxpayer identification number is one of the following two values: 

• Federal Id (Employer identification number). 
  Although PENTA does not require an EIN, the IRS requires it on the 1099MISC and 1099-NEC form to match reported income amounts. Refer to federal instructions for form 1099MISC and 1099-NEC.  
  The EIN is a nine-digit number in the format 12-3456789.  
  Verify that a unique EIN (or an SSN) is defined for each vendor requiring a 1099 form. 

• Tax Id # (Social security number) 
  Although PENTA does not require a SSN, the IRS requires it on the 1099 form to match reported income amounts.  
  The SSN identifies a self-employed individual. The SSN is a nine-digit number in the format 123-45-6789.  
  Verify that this information (or an EIN) is defined for each of your self-employed vendors requiring a 1099-MISC or 1099-NEC form. 

If you do not fill in either Id, PENTA issues a warning message during 1099 generation indicating both values are NULL. When this message appears, respond Yes to generate 1099s without identification numbers, or respond No to stop processing, then return to the Vendor Information window and enter one of the missing Ids. 

Before processing 1099MISC or 1099-NEC statements, review vendor information to make sure that all the vendors receiving a 1099 have either an EIN or an SSN. To review vendor information, generate and review a Vendor List report, or complete the following steps: 

Accounts Payable > Vendors > Vendor Information 

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1. Click the toolbar’s Enter Query button one time. 

2. In the Receive 1099 field, enter Y. 

3. Depending on whether you are searching for invalid EINs or SSNs, place the cursor in the Federal Id or Tax Id # field, respectively, and click the toolbar’s Expert Query button. PENTA displays the Expert Query pop-up window: 

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4. Click the !LIKE button. 

5. In the field that appears, enter one of the following: 

• _ _-_ _ _ _ _ _ _ (2 underscores, hyphen, 7 underscores) to find invalid formats of EINs.  

• _ _ _-_ _-_ _ _ _ (3 underscores, hyphen, 2 underscores, hyphen, 4 underscores) to find invalid formats of SSNs. 

6. Click the Accept button, and then click the OK button. 

7. When you return to the Vendor Information window, still in Query Mode, click the toolbar’s Enter Query button again. PENTA retrieves all the self-employed vendor records that have missing or invalid EINs or SSNs, depending on which one you included in the query. 

8. Make the appropriate corrections. 

9. Repeat steps 3.4.1.A for SSNs if you searched for EINs and repeat the steps for the EINs if you searched for SSNs. 

B. Verify Vendor Names before generating the 1099-MISCor 1099-NEC. 

The IRS requires that a vendor name on a 1099MISC or 1099-NEC form corresponds exactly to the vendor's name registered on the EIN or SSN. The IRS can impose a penalty for each 1099MISC or 1099-NEC statement that shows an incorrect name, so Penta Software strongly recommends that you contact your vendors to validate their names. 

C. Verify how the Vendor Name should print.

System Option 164 allows you to select which of two names PENTA prints on the 1099MISC or 1099-NEC. You can print the name from either of the following Vendor Information fields: 

• Vendor Name 

• Name on the vendor’s address 

This option allows you to create payment checks with a name different from the 1099MISC/NEC, usually needed for doing business as checks. 

System Management > Technical Support > Options 

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1. Query Option # 164. 

2. Verify which address is selected and change the selection if necessary: 

• N = Use the Vendor Name when generating the 1099s. 

• Y = Use the Vendor Address’s Name if one exists for 1099s. 

3. Close the window. 

D. Review name control code. 

For electronic reporting, the IRS requires a Name Control Code as further identification of the payee receiving a 1099MISC/NEC.  

Name Control requirements include but are not limited to these specifications: 

• The code is comprised of the first four letters of the surname of the person whose Tax Identification Number (TIN) is being reported, or, if not a sole proprietorship, the first four significant characters of the business name, disregarding “the” if it is the first word—unless there are only two words in the name.  

• You should exclude any apostrophes or spaces that may appear in the name.  

• For a name of less than four characters (such as “Ng”), the control code should be the complete name and nothing else.  

• A hyphen (-) or a blank space are the only acceptable special characters.  

Refer to Part E of Internal Revenue Publication 1220 complete current requirements, then review your vendor Name Control Codes. For example, to find self-employed individuals with a missing Name Control Code, follow these steps: 

Accounts Payable > Vendors > Vendor Information > Master tab 

1. Click the Enter Query button one time. 

2. In the Receive 1099 field, enter Y. 
   
   

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3. Place the cursor in the Name Control Code field and click the Expert Query button. PENTA displays the Expert Query pop-up window: 

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4. Click the NULL button, and then click the OK button. 

5. When you return to the Vendor Information window, still in Query Mode, click the toolbar’s Enter Query button again. 

6. PENTA retrieves all vendors with no entry in the Name Control Code field. 

7. Correct the invalid entries. 

E. Verify the1099-MISC/NEC vendor address. 

Although PENTA does not require address information during vendor setup, the IRS requires it on the 1099MISC and 1099-NEC form. Verify this information is defined for each of your vendors before attempting to generate 1099MISC or 1099-NEC forms.  

During the 1099 generation, PENTA looks to several address fields to determine which address to print on a 1099. 

1. PENTA looks to the (Default Addresses) 1099 field. If this field is blank, PENTA looks to the (Default Addresses) Remit To field. 

2. If the (Default Addresses) Remit To field is blank, PENTA looks to the Vendor Address block. 

3. If one or more Vendor Addresses exist, PENTA selects the address assigned Addr # 1. If no Vendor Addresses exists, 1099-MISC forms generate without address information. 

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You can verify that vendors have an appropriate address defined for 1099s by performing the following steps: 

1. Click the toolbar’s Enter Query button. 

2. In the Receive 1099 field, enter Y. 

3. Place the cursor in the 1099 field and click the Expert Query button.  
   PENTA displays the Expert Query pop-up window. 

4. Click the NULL button and then click the OK button. 

5. When you return to the Vendor Information window, still in Query Mode, click the toolbar’s Enter Query button. 
   PENTA retrieves all vendors with no entry in the 1099 field. 

6. Review records the query returns to determine whether the (Default Addresses) 1099 field has a 1099-specific address. 

3.5 Verify Reportable Amounts 

A. Create the1099 Audit Report.

The 1099 Audit Report (1099AUDIT) provides information about payments made to vendors, and you can use it to verify reportable 1099 amounts. This report includes all earnings codes, selects vendors with a Y in the Receive 1099 field, and reports regular Accounts Payable items as well as items entered via the 1099 Initial Load pop-up on the Vendor Information window. 

1. Generate this report by navigating: PENTA Reports by Module > Accounts Payable > 1099 Audit Report. 

2. Using criteria related to your particular needs, generate the report: 

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