1099 Reporting

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General Information

According to the Internal Revenue Service, a business is required to file Form 1099-NEC for each contractor the business paid at least $600 in non-employee compensation to during the year.

For a Broker, this includes both non-employee Agents and Vendors that supply product and services to Brokerage.

Due Date

The filing date for Form 1099-NEC is January 31. This means the following:

  • IRS - Copy A must be either e-filed or post marked by the due date
  • State - Copy 1 must be post marked by the due date
  • Recipients/Contractors - Copies B and 2 must be post marked by the due date

Paper vs Electronic Filing with the IRS

Current IRS regulations require the business to electronically file Form 1099-NEC if the business must file more the 250 1099-NECs.

If the business needs to file fewer than 250 1099-NECs, the business is encouraged to file electronically but not required to and may file via paper.

Filing

To properly file Form 1099-NEC for the 2020 filing season, requires the use of a 3rd party Form 1099 service. This is because at this time, Zipi is unable to electronically file or produce an agency fileable version of Form 1099-NEC. Form 1099 services include:

1099 services typically offer Federal and State filing as well as mailing of recipient copies for a low nominal fee per 1099. Most are able to import the csv file produced by Zipi with minimal modifications (column reordering).

NOTE: Zipi in no way endorses any of these services and the Broker is free to choose any other service they choose to use.


How Zipi Helps

Zipi gathers the information needed to allow a Broker to file the required 1099-NEC information returns.

  • Creates .csv file that includes selected recipients that can be imported into 1099 service.
  • Produces Non-Fileable Copy A of 1099-NEC for Broker's records
  • Produces copies B, C, 1 and 2 of 1099-NEC that can be provided to recipients.
  • Helps identify 1099 recipients that are missing W-9 information

Process

First Pass

  1. Select Reports → Create → Financial Report → 1099-NEC
  2. Time Period → Choose Last Year → Next
  3. Entity → Choose Participants from dropdown* → Next
  4. Form Pages → Select Copies to Print (for the first pass, just pick Copy A)
  5. PDF Generation → Select Options → Next
    1. Count Contacts - Number of Recipients to be included in each pdf
    2. Hide TIN Data - Applies a mask to the SSN/EIN for security
  6. Review 1099-NEC Report
    1. Total - Number of Contacts that a 1099-NEC is produced for
    2. With 1099-NEC payroll data - Contacts that have W-9 information entered
    3. Without 1099-NEC payroll data - Contacts that need W-9 information
  7. Select "Generate 1099-NEC for PDF
  8. Select "Bell" Icon in top right → View Files for the most recent message
  9. Select "Download" next to "Contacts without payroll information"
  10. Review the list of Contacts that are missing information
    1. Send W-9 to recipient requesting the required information (Form W-9)
    2. Remove contact from entity list / contact group if 1099 is not required

 

* Best Practice - In Contacts, create a class 1099-NEC and assign all Agents and Vendors to it.

Second Pass

After updating the missing contacts W-9 (1099) information and reviewing the numbers for accuracy repeat steps 1 - 7 above then:

  1. Select Download "Down Arrow" icon
  2. Select "Bell" Icon in top right → Download File(s) for the most recent message
  3. Edit 1099 csv file to match the format of the selected 1099 service
  4. File 1099s through service

 

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