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

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.