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1099-NEC Reporting

1099-NEC Reporting

12 30, 2020

Issue/Symptom/Question

What is the 1099-NEC functionality and how are these generated?

Applies To

Penta for Windows

Accounts Payable > Year End Processing > 1099 Processing > 1099 Generation

Resolution/Fix/Answer

The IRS has created a new 1099 form for reporting Non-Employee Compensation. This type of payment is no longer reported on the 1099-MISC.

When is the 1099-NEC created?

  • Only if the vendor had payments where PENTA 1099 Earnings Code = 7

  • Only if the vendor Receive 1099 = Y

  • Only if "NEC" is entered in the 'Type of 1099' field in the 1099 Generation window

 

What to do if updates are needed and how to process:

Update the Vendor Earning Designation via Change 1099 Earning Designation on AP Distributions. Navigate to the 1099 Generation window via Accounts Payable > Year End Processing > 1099 Processing > 1099 Generation. Update the information and enter (no dropdown available) NEC in the Type of 1099 (MISC/NEC) field. Update the remaining fields as needed, exit the window to generate the report. If the Create Government Electronic Submission Files (Y/N) is update to Y, then Penta creates the electronic file. Paper copies will be available in your Report, Monitor, Print and View window. 

Below is relevant information:

  1. PENTA can generate the 1099-NEC from the above window within Penta for Windows for a specific OU and calendar year.

  2. PENTA prints the 1099-NEC on all supported paper forms. 

  3. A PENTA user can differentiate between non-employee compensation reported on a 1099-NEC and other payments reported on a 1099-MISC in Vendor Information window.

  4. 1099-NEC Instructions for Recipients gets printed on the back when Form ID LB1099RI (Print Front & Back-Env 7950862) is selected.

  5. Box 1 (Nonemployee compensation) reports the sum of 1099 Earnings Code 7 (Non-Employee Compensation).

  6. Box 4 (Federal Income Tax Withheld) and Box 5 (State Tax Withheld) report the tax amounts related to 1099 Earnings Code 7 (Non-Employee Compensation). They also include tax amounts entered via the 1099 Initial Load Amount popup window on the Vendor Information screen for vendors with 1099 Earnings Code 7 (Non-Employee Compensation) amount greater than zero.

  7. 1099-NEC is not generated if the vendor has no 1099 Earnings Code 7 (Non-Employee Compensation), even if the vendor has other 1099 Earnings Code amounts.

  8. New report codes 1099NEC (Federal Form 1099-NEC), 1099PAYERNEC (Fed Form 1099-NEC Payer Copy), and TEST1099NEC (Test for Fed Form 1099-NEC) are generated for the 1099-NEC process.

  9. New report code 1099PAPERTTLNEC (1099-NEC Paper Totals Report) is generated that summarizes the information on the 1099-NEC paper forms.