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1099 Reporting on Vouchers. IRS 1099s the Basics. Melissa.Fuhrman@da.ks.gov is the new 1099 Accountant What is a 1099? It is an informational return to report various type of income other than wages.
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IRS 1099s the Basics • Melissa.Fuhrman@da.ks.gov is the new 1099 Accountant • What is a 1099? It is an informational return to report various type of income other than wages. • The IRS requires the state to issue 1099s to reportable entities for services, rentals, awards, certain type of grants, interest, dividends, and certain real estate purchases. • D of A submits 5 types of 1099 (see coding guide at the end) • 1099-MISC: Services, rents, awards • 1099-G: Governmental payments (tax refunds are the Dept of Revenue) • 1099-INT: Interest • 1099-DIV: Dividends • 1099-S: Real estate • 2 things must occur for there to be 1099 reporting: • The entity must be subject to 1099 reporting • The payment must be reportable
Is the vendor 1099 reportable? • If the vendor is not set up in SMART you must obtain a W-9 • What entities are NOT (currently) reportable: • Corporations are NOT reportable UNLESS they provide medical or legal services • Governments • Tax Exempt Organizations • What vendors are reportable: everyone else. • LLC stands for Limited Liability company. The federal government does not recognize an LLC as a classification for federal tax purposes. An LLC can be a corporation, partnership or sole proprietorship.
Vendor file and 1099 reporting • You must check the withholding box on the vendor Identifying Information tab if the vendor is subject to 1099 reporting • Setting up the 1099 types and class • Each location needs the 1099 set up • The default type and class will initially populate on the voucher • Each location should only have one default type • Set up all the classes you anticipate the vendor needing
Is the voucher reportable Reportable: • 01 Rental • 02 Royalties • 03 Prizes, Awards, other • 06 Medical, including medical laboratory service • 07 Services including legal • 14 Gross Proceeds • payments made to an attorney as part of a legal settlement or court order. • Gross proceeds may be issued in the names of the attorney and the client. • Gross proceeds may include an amount for the attorney’s services. • If you can determine the amount of attorney fees included in the gross proceeds, report the fee in box 7 and nothing in box 14. • Not Reportable: • Commodities and refunds (other than the Dept of Revenue tax refunds)
Vouchers for reportable vendors • Online entry defaults with withholding turned on and the default 1099 type and class. • Vouchers uploaded via INF02 with the WTHD_SW field blank, T, or Y have withholding turned on, with the default 1099 type and class. • How do you remove withholding on a payment voucher? • If you upload vouchers via INF02 enter N in the WTHD_SW field for each invoice line that should not have withholding. • If you key vouchers on-line, click the Invoice Information tab on the voucher. Click the withholding link on the right hand side of the voucher.
1099 reportable vouchers • For each invoice line that withholding is NOT applicable uncheck the green checkmark on the Withholding applicable box, and the Applicable box (two checks per invoice line). Click “back to invoice”, save the voucher.
Voucher • 1099 reporting is by invoice line. All distribution lines for a invoice line will have the same 1099 reporting. • Change the withholding code for each line as appropriate. If you select a vendor type and class that is not set up, the payment will suspend, and Melissa will have to correct it. Please contact the vendor team to change/add 1099 classes. con
