1099 Reporting Summary

Transcription

1 Sonoma County Office of Education 1099 REPORTING 2015 December 15, Reporting Summary Date: Monday, December 15, 2015 Time: 9:00 am 11:00 am Presenters: Marie White and Tracy Lehmann Overview of Escape 1099 Process Reviewing Setup Loading Information Reviewing Vendors Adding Vendor to 1099 List Printing 1099s Reference: Escape Guide Chapter 19 View Tutorial Timeline Schedule 1099 Verification December 13 Load 15.3 Version of Escape into Production (System down until noon.) December Workshop December 22 Last APY Production January 13 Verification Reports due to SCOE (Submit Verification Reports by 4:30 pm or BEFORE) VERIFICATION REPORTS - ReqPay07 Vendor 1099 Log - ReqPay16 Vendor 1099 Detail **Both Final Reports must be signed by CBO** January 26 SCOE Printing 1099s January s are mailed by SCOE Business Services Reminder: After SCOE has generated the 1099 file, NO new data can be added to 1099 Form by the Districts. Districts will need to contact Erin Graves Reporting /14/2015

2 VENDOR TAX CLASSIFICATION What is a 1099-Misc information return? Form required reporting payments for: Services, or, A combination of services and products When are 1099 Miscellaneous Forms required? REQUIRED Income of $600 or more for rents, services (including parts and materials) Medical and Health Care Payments Gross Proceeds of $600 or more paid to an attorney Non-Profit Organizations (Engaged in a Trade or Business) NOT REQUIRED Generally, payments made to a corporation Wages paid to an Employee (Reported on W2) Business Travel Allowances (Reported on W2) Payments made to Tax-Exempt Organizations SPECIAL CIRCUMSTANCES Reportable payments to Corporations include: Medical and Health Care Payments - Box 6 Attorney Fees Box 7 Gross Proceeds paid to an Attorney Box 14 Deceased Employee s Wages Box 3 Independent Contractor vs. Employee What is the difference? Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. Here are the three common law rules to determine the relationship: Behavioral Company has control or has the right to control what the worker does and how the worker does their job Financial Are the business aspects of the worker s job controlled by the payer? (These include thinks like how the worker is paid, whether expenses are reimbursed, who provides the tools/supplies, etc.) Type of Relationship Are there written contracts or employee type benefits (example: pension plan, insurance, vacation pay, etc.) Will the relationship continue and is the work performed a key aspect of the business? Reporting 2 12/14/2015

3 Misclassification If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Refer to IRS Code section 3509 for more information. Is it required that we obtain a W-9 form from Vendors? Yes, The Internal Revenue Service requires that you obtain W-9 forms when you make inventory and service purchases from a vendor to create a paper trail that allows the agency to catch vendors who do not report income and to prevent you from claiming illegitimate vendor expenses. The IRS requires that you obtain a W-9 from every vendor from whom you purchase $600 in labor and services or $5,000 in direct sales, but you can request W-9s from vendors for smaller purchases. You have to obtain this form only once from each vendor unless its business information has changed. This rule does not usually apply to vendors to whom you would normally issue 1099-MISC forms, because 1099 income is reportable on the personal income tax returns of vendors. The vendor must send you a copy of his W-9 upon request, or he will pay a $50 fine to the IRS. What information does the W-9 provide? The W-9 form provides information that you will need to set up and review the vendor s 1099 information. The form requires the vendor to designate their taxable status. The vendor should complete the following fields on the W-9: Section 1: Name as shown on their income tax return, cannot be blank Section 2: Business Name Section 3: Check the appropriate box for federal tax classification ( Section 4: Exemptions (if any) Section 5 & 6: Address Part I: Taxpayer identification Number (TIN) Part II: Signature one box) Reporting 3 12/14/2015

4 1099 Vendor Tips: A 1099 vendor can only have one active SSN or TIN Vendor can be a sole proprietor and not be an Independent Contractor In both cases you must have the 1099 field marked : Yes A vendor that supplies you with a SSN must supply their full name A vendor that supplies you with a EIN/TIN must provide the business name A vendor may have changed business types, remember to update 1099 flag An Independent Contractor must provide a SSN for Independent Contractor Reporting requirement A Partnership must supply one EIN/TIN that can be associated with the business name AN LLC must report as either a P for partnership or a C for corporation, or an S for S Corporation Tax Classification Section Reporting 4 12/14/2015

5 Review Organization Record Go to System Setup Organization This is read only, but you will want to review the setup for your District. Changes needed require an to Review Section 5 AP 1099 Setup for Employer Name, Address and Print Sort Options Review Account Component Setup Escape Online allows you to control to which box a vendor s payments are reported by specifying the applicable object codes for each box. The system searches through the checks looking for specified object and reports the amounts to the appropriate box. Go to Finance Setup Chart of Accounts Account Components Component = Object Click Go Can narrow search in Component Value by selecting accounts by major object code 5000 = Services & Other Expenditures 6000 = Capital Outlay Reporting 5 12/14/2015

6 Review the 1099 Form Box in the Account Components activity. Designations have been made here to allow the system to automatically flag anything paid to these objects will be populated into the correct 1099 form boxes (Escape looks for 1099 coding first) In all cases vendors must be set up to be reportable in the vendor record Review the box definitions for use in the Account Component 1099 boxes noted above Box 1 Rents Real Estate Rentals (Not the agent) Machine Rentals (Only the actual rental fee) Box 3 Other Income Beneficiary of deceased employee Box 6 Medical and health payments No exemption from reporting even if a corporation Not required to report drug payments Box 7 Nonemployee Compensation $600 or more paid for services performed by a nonemployee Could have been to an individual, partnership, estate and in some cases a corporation Attorney fees, even if a corporation must be reported here Should include Attorney fees only Box 14 - Gross Proceeds Paid to an Attorney When you cannot determine what part of the payment is a settlement and what part is the actual attorney s fee Reporting 6 12/14/2015

7 To Change 1099 Object Definition Go to Finance Setup Chart of Accounts Account Components Permission based - Not all APY users will have access to the Account Component activity o Please check with authorized employee in your district to make changes Object codes can be changed in the Form 1099 Box field. Use the drop down to select the correct 1099 Box Save/Close The system will go back and pick up any payments made to the new object designation when a new 1099 search is made Reporting 7 12/14/2015

8 Review Vendor Setup Vendor records are critical part of review for 1099 Go to Finance Purchasing Vendors Limit your list to only those vendors with the 1099 flag set in their record and those that have received payment during the 1099 tax year Vendor = Yes Payment Dated = 1/1..12/31 for tax year Click Go to get the list New in the Vendor Record Tax Classification can be selected Review the following: Tax Id is formatted correctly Verify Federal and State Numbers o Federal number must be associated with a company name o Social Security numbers must reference an individual s name o 1099 process first looks for the Federal Tax id o SB542 first looks for the State Tax id (Independent Contractor) 1099 Form Box is filled in appropriately Verify that this box is coded 0 (N/A) or the system will override all object designations and report all vendor payments to this one box Reporting 8 12/14/2015

9 o A vendor that has several types of payments should not have this box hardcoded to box 7 (Non-Employee compensation) or any rents would not automatically go to box 1 (Rents) 1099 Flag is set to Yes (a must to create a 1099 form) If the flag is set to no, you can change it now and then any the vendor payments will appear on all future 1099 vendor searches o Report searches can be run using this designation Verify the 1099 address Set the default in the Address section o If there is no 1099 address marked the system will take the last paid address (or remit to) Watch vendor names and address that are longer than 30 digits o Use the // to separate lines (either name or address) P O Box 70049//123 Main Street will print on two lines The IRS only allows for 40 characters on one line as a street address, while Escape allows 60 characters spread over two lines You may want to create a separate address for 1099 remits Watch out of country vendors o Escape Chapter 8 Vendor Management If you are reporting a vendor with a SSN and have paid using a vendor name be sure to have a DBA vendor address Watch for business changes o Sole Proprietor to Corporation Add a new vendor for the corporation New payments to the new vendor 1099 amounts may need to be altered o Business sale Trade name may be the same but the taxpayer id will not be Add a new vendor 1099 amounts may need to be altered Reporting 9 12/14/2015

10 o Change in business needs May not have originally been flagged for 1099 inclusion 4XXX now 5XXX, 6XXX business type o Suspect a business change Ask for a new W-9 Adjust vendor as needed Working the 1099 List Go to Finance Processes Tax Reporting Vendor 1099 Reference: Escape Guide Chapter 19, 1099 Reporting, pages Tutorial Available from Tools in upper right hand corner of Escape screen Define your search to produce a list that addresses your current process needs o First time search use all defaulted values (all blanks as shown below) Search criteria to watch thereafter o With Changes o Yes - Only vendors that you have modified through the 1099 process will appear on the list o No - Excludes vendors from the list that have changes already made through the 1099 process o Blank - Allows the list produced to include all vendors regardless of changes made to them (default) o 1099 o Yes Produces a list of all 1099 qualified vendors and that have no errors The vendors are currently ready to go to the IRS as is o No Produces a list of vendors that do not qualify to receive a 1099 for a variety of reasons Under the $600 limit Undefined object boxes Not flagged to receive a 1099 o Blank Shows all vendors, all errors, all dollar amounts (default) o Include Closed Years o Yes Gives you access to both prior closed and current year data Only current year 1099 data is editable Reporting 10 12/14/2015

11 o No Gives you a listing of only current year (editable) records Review the produced list for any changes needed o Verify that there is an identification number present for each vendor o Verify TIN/EIN s have business names o Verify any SSN s have a individuals name o Review the list for any errors that show in the far right column of the list o Review the Vendor 1099 column on the left of the report and verify that all the vendors you expected to create 1099 s for are marked with a Y Changes needed must be done from either the Quick link or in the Vendor activity Snapshot Highlight vendor line on the list, click on the Magnifying Glass on the tool bar Reporting 11 12/14/2015

12 Investigating From the List/Editing Data Go to Finance Process Tax Reporting Vendor 1099 Vendor changes can be done using the Quick link or in the Vendor activity Highlight vendor, Open Record, Click on Quick link (small yellow icon) to go to Vendor record to make changes. Review Vendor Setup Tax ID, Tax Classification, Independent Contractor Information, Payment Information, W9 Required? Attached, Flagged for 1099? Review Payment tab, select the quick link for a payment to review account code Reporting 12 12/14/2015

13 Manually Adjust 1099 Form Box Amounts To change the reportable amounts on your original 1099 list o Select the vendor you need and open the record o From the Task menu drop down Select edit and the fields will open Note that only the first box in each section will open The remaining fields are locked as those amounts came in from system generated activities Enter negative and /or positive adjustments in Non-Employee Adjust field o Note: Make sure to use the Adjustment Reason field for description of change Save/Close the record Go to Search to refresh list and view changes The adjusted amounts will be in Adjustment Amount Column Reporting 13 12/14/2015

14 Manually Add a Miscellaneous Vendor Select New from the 1099 vendor list you originally created This method can be used to add miscellaneous vendors Vendor record must exist and be active in ESCAPE to input Vendor Code o Enter the Vendor Code (Vendor must already exist) o Example : ASB (Associated Student Body) payments made outside Escape, can be manually added to the Vendor 1099 Record o Enter all necessary 1099 data for the vendor o Enter Adjustment Reason o Save/Close For the manually added vendor to show on your 1099 vendor list, you will need do a new Vendor Search Always review the entry on the list o This manual vendor record may still needs some editing to report correctly o Review if vendor flagged for 1099 o Review Tax ID Reporting 14 12/14/2015

15 Importing 1099 Amounts This feature can be used to import vendors and amounts that were paid outside of Escape but need to be included in the 1099 process, such as payments for ASB (Associated Student Body), Petty Cash, Revolving Funds, etc Reference Escape Guide Chapter Reporting, pages and pages Tools/Tutorial This is a two-step process 1. Create CSV File 2. Import CVS file into Escape Rules to remember 1. Each district can have only one file If there was something left off the first file, the second file must contain all the previous records in addition to the new information. 2. All vendors on the file must exist in Escape prior to the file import 3. Use full Vendor ID including leading zeros For Import Template Go to Online Resources Templates 1099 Import 1. Click on 1099 Import 2. Click Ok to Open Excel 3. Enable Editing 4. File includes headers and fields to complete Headers: Org ID, Calendar Year, Vendor ID, EGP(Box 13), GPPA (Box 14), Health (Box 6), Nonemployee (Box 7), Other Import (Box 3), Rents (Box 1), Royalty (Box 2), SIT(Box 16), EIN 5. Save As CSV File on Desktop To Import file into Escape Go to Finance-Processes-Tax Reporting-Vendor 1099 Select Search Criteria, Click Go Click on Task to select Import Data Locate and select CSV File on Desktop Click on Open File import successful or error message will appear If errors, resolve and try import again Reporting 15 12/14/2015

16 1099 Verification Reports Processes - Tax Reporting Vendor 1099 Create 1099 List using the defaults or use the search criteria to create list Once changes are made to any vendors/component designation, the 1099 list must be rerun to show the most current vendors to be reported 1099 Snapshot Process Tax Reporting Vendor 1099 Copy of the proposed 1099 form is available from the list, highlight vendor, click on Magnifying Glass in tool bar to open snap shot ReqPay07 Vendor Log Finance Reports Req/Payment Review Report Final Report must be NO-Only Vendors with No Errors-receiving a 1099 Final Report must be YES Show the Full 1099 Name Final Report must be signed by CBO and submitted to SCOE January 13, 2016 by 4:30 pm ReqPay16 Vendor 1099 Detail Finance Reports Req/Payment Review report for errors Final Report must be NO-Only Vendors with No Errors-receiving a 1099 Final Report must be YES Shoe the Full 1099 Name Final Report must be signed by CBO and submitted to SCOE January 13, 2016 by 4:30 pm ReqPay18 Vendor Check Details Finance Reports Req/Payment Provides object detail for all payments Reporting 16 12/14/2015

17 Homework Chapter 19, pages Every vendor record must be corrected before it s 1099 Form can be printed! Vendors with errors will cause the Escape system to reject all 1099 printing requests! Common issues o Tax Payer number is incorrectly formatted or missing W-9 o Vendor address is missing lines characters 60 Escape vendor characters DBA Vendor o Payments did not reach the $600 threshold ASB/Petty cash entries made Vendor status reviewed after manual additions o The vendor is flagged to not receive a 1099 and they should be o If their classification is "Corporation" and they provided medical or legal services Are the services truly considered "medical" What classification did they put on their W9 o Reclassification of rental payments Object coding is best Duplicate Vendors o Determine which Vendor Record has more requisitions recorded against it Inactivate the other record by changing the vendor s active flag to No o Edit the Vendor 1099 Record of the inactive vendor, adjusting the amounts to zero Put a note in the Adjustment Reason field referring to the other vendor s code o Edit the Vendor 1099 Record of the active vendor, adding the amounts from the inactive vendor Put note in the Adjustment Reason field referring to the other vendor s code Duplicate/Multiple Tax ID s o Research the vendor list o Modify the Vendor Records accordingly Negative Amounts o Review vendor to determine why the amount was negative and make an adjustment with a detailed reason in the Vendor 1099 Record o You may have created a credit memo and used a different object code than used in the original invoice Submit final reports ReqPay 07 & ReqPay16 with CBO signature by January 13, 2016 by 4:30 pm Reporting 17 12/14/2015