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      Does xTuple support IRS form 1099-NEC?

      Changes to the 1099 form for non-employee compensation (NEC) are supported by updates from xTuple

      The addition of the NEC form was added to xTuple starting in version 6.0.4.  There is a package available in the customer downloads for anyone on an earlier version.

      1099 Filing Updates

      This irs1099For2020 extension is a patch to the xTuple core for filing 1099 forms beginning January, 2021. The US Internal Revenue Service (IRS) updated its requirements for filing non-employee compensation (NEC) reports. In prior years this was reported on form 1099-MISC. Some information from the old 1099-MISC must now be reported on a new form 1099-NEC, while other information is still reported on a revised 1099-MISC. IRS form 1096 was also revised to account for the new 1099-NEC.

      Modifications to xTuple core behavior are described below. The core feature is documented in the xTuple Reference Guide and an article that goes into more depth.

      Changes to the Info for 1099's Window

      This extension modifies the behavior of the existing xTuple ERP window Info for 1099's (Accounting > Tax > Reports > Info for 1099):

      • A new 1096 Contact field has been added. Use this to select a contact name, email address, and phone number to print on the 1096.
      • The From Date and To Date fields are automatically set to span the 2020 calendar year. They can still be adjusted manually.
      • New columns have been added to display additional reporting categories (see the next section) for 1099-MISC. They are not new IRS reporting requirements; they are categories that the xTuple core product does not handle.
      • The old PRINT button prints the 1099Info report, which summarizes the data reportable on various versions of the 1099 form.
      • The 1099Info report has been expanded to show the additional reporting categories.
      • The old PRINT 1099 button has been replaced by two buttons, PRINT 1099-MISC and PRINT 1099-NEC.
      • The old 1099MISC report is not used. A 1099MISC_2020 report is used instead to match the revised 1099-MISC form.
      • A new 1099NEC_2020 report has been created to match the new 1099-NEC form.
      • A new 1096_2020 report has been created to match the revised form 1096.

      Changes to the Accounts for 1099 Report Window

      Clicking on the SELECT ACCOUNTS button of the Info for 1099's window opens the Accounts for 1099 Report window, just as before. The difference is that the extension adds some new buttons on this window. Each "ADD" button marks the selected general ledger account with a different tag. Each tag corresponds to a different category of funds reportable to the IRS.

      The old ADD MISC button remains unchanged but the accounts tagged MISC are handled differently. This extension assumes that most information reported on 1099-MISC in prior years was for non-employee compensation. Therefore the general ledger accounts tagged MISC are used to calculate the non-employee compensation figures reported on form 1099-NEC, box 1. All other tags are used to calculate figures for form 1099-MISC.

      The old ADD RENT button also remains unchanged. Figures calculated from accounts marked RENT are displayed in 1099-MISC box 1.

      New buttons have been added:

      | Tag | Purpose | Revised 1099-MISC field | ---------- | ------------------------------------ | ----------------------- | BOAT | Fishing boat proceeds | box 5 | CROPINS | Crop Insurance | box 9 | LEGAL | Legal expenses | box 10 | MEDICAL | Medical and health care payments | box 6 | NONQUALDEF | Nonqualified deferred compensation | box 14 | NPCONTRACT | Notional principal contract payments | box 3 | PRIZE | Prizes and other awards | box 3 | ROYALTY | Royalties | box 2 | SEC409ADEF | Section 409A deferrals | box 12

      Report Changes

      All three IRS form reports print one per page. This is consistent with the guidance in the following documents from the IRS:

      Report fields have been aligned to match these same templates. If your pre-printed forms have two 1099-MISC or 1099-NEC forms per page, check carefully. If both are for Copy A (the copy sent to the IRS), copy the report definitions to higher grade and change the paper size:

      • Document > Page Setup
      • Change the Paper Size to Label
      • In the Labels section, choose 1099 Label from the list
      • Click OK
      • File > Save or Database > Save to Database the report

      If each page holds different copies, such as Copy A and Copy 2, copy the report definitions to a higher grade, copy all of the fields, paste, and position the duplicated fields to align properly with the bottom half of the preprinted page.

      Other IRS information

      Assumptions and Limitations

      • The payer's EIN comes from the Ext Ref field of the tax authority with code containing 1099. There must be exactly one such tax authority.
      • Payer information:
        • The payer's name and address come from the Remit-To Address at Accounting > Setup > Accounting > Accounts Receivable.
        • The payer's EIN comes from the Company ID field at Accounting > Setup > Accounting > Accounts Payable. This value is used regardless of the selected radio button (EIN/TIN, DUNS Number, Other).
        • Payer details can be changed by copying the 1099-header query to a higher grade and modifying it.
      • Form reports print 0.00 although the IRS prefers these be left blank.
      • 1099-NEC fields not supported at this time (there is no mechanism to store or calculate the value):
        • VOID checkbox
        • CORRECTED checkbox
        • 2nd TIN not. checkbox
        • box 2 checkbox — direct sales total > $5000
        • box 4 — federal tax withholding
        • boxes 5, 6, 7 — state tax information
      • 1099-MISC fields not supported at this time (there is no mechanism to store or calculate the value):
        • VOID checkbox
        • CORRECTED checkbox
        • 2nd TIN not. checkbox
        • box 4 — federal withholding
        • box 7 checkbox — direct sales total > $5000
        • FATCA checkbox
        • boxes 15, 16, and 17 — state tax information
      • EINs and TINs are not checked for proper formatting
      • Payments that should be reported on form 1099-K are not distinguished from other payments and may therefore be reported improperly. 1099-K is for "Payment Card and Third Party Network Transactions".