1099 Reasons to Love January

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Alicia Katz Pollock: Hey everyone, welcome to this week's edition of the unofficial QuickBooks Accountants podcast. I'm your host, Alicia Katz Pollock of Royal Com, and I am excited to be here on this morning. I just spent this week in 1099 Heaven, which is why I'm calling this episode 1099 Reasons Why We Love January. On Tuesday, I taught [00:00:30] my 1099 class and also attended a bunch of 1099 workshops. One of them was Nancy McClellan's ask a CPA, and I've been using Jennifer Diamond's 1099 Problems website, and I've just been immersed in 1099 all week long doing them, filing them, asking for w-9. So I figured I would share a little bit of everything that I have learned and everything that I know about it. So this is going to be, you know, 20 minutes or a half [00:01:00] an hour of 1099 essentials and nuggets. But I do have a recording of my course. So if you go to Royal Wise or the bit.ly is ROI. In capital letters 1099 again, that's r o y w QBO 1099 with QBO in capital letters. And that's the bit.ly. It's a short link. So [00:01:30] that gives you the full three hour explanation of everything that I'm going to talk about in a 30 minute nugget. So here we go on the fire hose, abbreviated versions of everything that you need to know about running 1099 in QuickBooks online for you and for your clients in 2026. So let's start with compliance. So what are 1099? Why are they important? I'm really going to focus [00:02:00] on 1099 neck and misc forms.

Alicia Katz Pollock: Neck is for non-employee compensation. 1099 misc was the form that most small business owners used for years, but so many people were just using box one for their non-employee compensation that they turned it into a whole form a couple of years ago. So now we have a form just for this. Basically what we're doing is if you are a business owner and you are paying another business [00:02:30] for services, you need to tell the IRS that you are working with them and that you gave them money. And the reason why the IRS asks us to do this is first, mostly it's a verification that the contractors are reporting their income because they're afraid that you're going to work. They're going to work under the table and not report their income. So they're making sure that the people who hired them to do work really did pay them. And that the business, [00:03:00] the the contractor really is reporting their income. So they're just making sure that they're not working under the table. In other words, the US is making us, as business owners, jump through hoops to be their tax police. And yeah, I'm a little cynical about this. I think that literally millions of dollars, if not billion dollars, is wasted in lost productivity while we chase down w-9 forms and file all these forms and do all of our research just to [00:03:30] make sure that everybody is on the up and up.

Alicia Katz Pollock: So it's kind of a vicious cycle. So along those lines, does your accuracy matter? Well, yeah, of course this is a legal process and there are fines if you don't submit. And it's how our financial system works. But I also want to reassure you that if you make a small mistake on a 1099 form? Nobody is going to come after you. Well, I mean, this is not legal [00:04:00] advice. I have heard a story here and a story there, but usually when it's really, really material. So if you're 1099 is off by $100 or $200, it's not like anybody's going to come knocking on your door for it. So there's a little bit of reassurance. Now, again, not legal advice. I'm not telling you not to be accurate, and I'm not telling you not to do your due diligence and be as accurate as possible. But for the people who are spending hours and hours and hours and hours double checking [00:04:30] themselves because they are afraid of getting it wrong, the IRS is short staffed. They're really not looking for $600 in revenue. You know, if you're talking hundreds of thousands of dollars, then it's a bigger concern. Now, 1099, Misc. and Neck are just two of a lot of different kinds of forms. There's a 1099 K, which is for merchant services. There's 1099 int for interest from your banks or from your bonds. There's a 1099 div for dividends and capital gains [00:05:00] distributions.

Alicia Katz Pollock: There's a 1099 g for government payments like unemployment and state refunds. There's a 1099 Q for distributions from your education accounts. So there's lots of different kinds, but we're just focusing on misc and NEC because that's what QuickBooks can do for you. New this year in 2026, there is a new 1099 form called a Da for digital asset transactions. And that's finally tracking cryptocurrency sales and crypto [00:05:30] income. So they are finally trying to find a way to codify a cryptocurrency economics. And something else to realize is that they had talked about changing the threshold in 2025, but they didn't do it. So this year, the thresholds for your 1099 are still $600, but in the one big beautiful bill, they are upping it to $2,000 in [00:06:00] 2027. So that's good news, because I don't know about you, but the vast majority of my small businesses and micro businesses probably wouldn't even qualify and won't need to do this at all next year. So that's a breath of fresh air. So I'm looking forward to that threshold. That's $600. Threshold has been in place for decades and the cost of living has increased. You know, things are more expensive than they used to be. And $2,000 is not is is perfectly reasonable. $600 [00:06:30] could be just one job. So if you hire somebody one time, you know, you got to jump through all these hoops. So I'm glad to see that in 2027, this is going to be a lot less of an issue than it is right now.

Alicia Katz Pollock: All right. So now the relationship between QBO and 1099 is basically that QBO has a contractor's center that a lot of people don't even use, but there is a contractor's area where you can handle all of your 1099 [00:07:00] vendors from gathering their information to actually paying them. Um, and, um, I'll go into the contractor center actually a little bit more in a few minutes. Um, the other things that QBO does is it helps you gather up your 1099, it helps you file them with the IRS and send the forms to your qualifying contractors. All right. So I just spat out a bunch of terminology at you. So w-9. What's a w-9? A w-9 is the form [00:07:30] that you give to a subcontractor when you hire them, so that you can find out if you need to send them a 1099 or not. And even my clients that I've had for years this year for some, you know, took on a couple of new vendors and they're like, well, I've never had to do these 1099 before. Why do I have to start now? It's like, well, you hired a new person or your landlord changed. And so now what the W9 does is it qualifies the person [00:08:00] to see whether you need to file a 1099 for them or not. So every time you hire a new subcontractor, you send them a W9 form.

Alicia Katz Pollock: They send it back and you'll know. Now the thing with W9 forms is that honestly, a lot of people fill them in incorrectly, because now I'm going to get into the all the who gets what's for 1099 in a minute. But the problem with W9 forms is that they're actually confusing to fill out because there's a name [00:08:30] for there's a. The first line is for the person's name, and the second line is for their business name. Or if the if it's a disregarded entity. And when I say disregarded entity, it basically means that the business itself isn't paying the taxes. The taxes are flowing through to somebody else's tax form, whether it's a sole proprietor and it's going on their schedule C, or whether it's a S Corp, and [00:09:00] the S Corp is actually paying the taxes for the LLC. So most of the time it's LLCs that fall in this gray area. And a lot of the time people just fill in the form incorrectly. So the the information that goes on your w-9 form is supposed to be filled out by the entity who's actually paying the taxes, not the pass through disregarded entity. Um, I actually have a class that shows how to fill in a w-9 [00:09:30] properly. Properly. It's with a guest instructor, Shannon Bowman. Theiss. And when you go to Royal Comm, there's a course specifically on how to fill in payroll forms, and so that payroll forms class does include going into a w-9 in a conversation about this in detail.

Alicia Katz Pollock: All right. Let me back up a little bit and actually talk about how 1099 work. So the first thing is the the first piece of terminology is when I use the words independent contractor, [00:10:00] contractor or subcontractor, I'm using them interchangeably. And what it basically means is that somebody has a business and they provide a service to other businesses, and you're hiring them to do a task for you, for your company instead of hiring an employee. And sometimes that is a fine line between what's an employee and what is a what. What qualifies as a contractor. Therefore, it's important to actually start with making sure [00:10:30] that should you be hiring the person, or is it okay to pay them as an independent contractor? The biggest determinant is are you their only client? If they only work for you and they don't work for do the same work for other people, then they're probably really an employee if they are performing this same service for other people in addition to you, then yeah, they are running their own business. Are they using their own equipment or are they using your equipment? Are you setting the schedule or are they setting the schedule? So [00:11:00] if you're hiring them to achieve a specific outcome, but you're leaving it to them to do it however they see fit, you just are responsible for the end result. Then there might be a contractor, but if you're telling them when and how to do the work, then they're probably an employee.

Alicia Katz Pollock: You know? As an example, I have a client who's a cleaning service, and she has been paying all of her cleaners as independent contractors for years. And I've been telling her literally from [00:11:30] the time that I hired her, that I don't think that these are independent contractors. I really think that these are Our employees because you're providing the cleaning materials. And she's like, oh, well, they have their own supplies. They have their own buckets. They set their own schedules. I just call them up and say, hey, can you do this job on Tuesday at three? But sure enough, she got audited after 15 years. And it turns out that the IRS did agree with me that they really are employees. [00:12:00] And so she now has some fines to pay, and we are setting her up for payroll. So don't let this be you. It's not that big a deal to make somebody an employee if you want to control the process and the outcomes. All right. Now who gets a 1099 1099 are sent to self-employed individuals, LLCs filing as sole proprietors and partnerships. You do not send them [00:12:30] to corporations, whether it's an S Corp or a C corp. If they're incorporated, Then they're completely off the hook. How do you know? Well, that's where the w-9 comes in. You should. When you hire a company to perform a service for you, send them the w-9 right away.

Alicia Katz Pollock: And don't pay them until they return it. Don't wait until afterwards. Be proactive with it. And that [00:13:00] way, you. You're not going to wind up chasing them down in December and January to get it. Don't wait to see if they reach the threshold. Just go ahead and send it. And a lot of new tools are helping you with tracking your your w-9 forms. Double, formerly keeper has 1099 tools built in and Intuit Accountant suites. New books close feature is going to have 1099 tools in it as well, so take [00:13:30] a look for those and see if they're going to to help you with this. Now, if they don't send the 1099 back to you and they ignore you, you are actually supposed to withhold 24% of their pay and submit their taxes for them. And that warning is usually enough to get them to reply and send you the 1099. If they don't send it to you, then you still need to file their 1099 and you just leave the the ID number, the Ein number blank. [00:14:00] Now unfortunately that might trigger an audit for them, but if they're not sending you a w-9, well, what are they hiding? Why is there a concern anyway? So that's on them. Now, the deadline for 1099 is January 31st. And sometimes I get the question. Well, I'm not. My books aren't ready in time for to to send them.

Alicia Katz Pollock: Well, if you're late, file anyway. Filing late is better than not at all. And there is an IRS [00:14:30] form. I think it's 8809 that you can file a 1099 extension if you need to. Now what receives a 1099 service providers, attorneys and rent repaid to independent landlords. So if it's a property management company you don't need to to send them a 1099. But if it's an individual homeowner who is renting out their property to you, you do need to send a 1099 misc. You don't need to send 1099 [00:15:00] for products and materials. So those are off the hook now. So the kinds of categories that you wind up sending 1099 for are advertising and marketing, repairs and maintenance, legal and professional fees, cost of labor commissions, continuing education. But also pay attention to your balance sheet accounts as well. Are there potential qualifications under prepaid expenses, under leasehold improvements and due to [00:15:30] from accounts also that even if you have one company paying on behalf of the other company, it's the company who the work was performed for. That is on the hook for the 1099. Now, a frequent question that I get is about reimbursement for materials, and you do not need to send a 1099 for material reimbursements. Now, where this gets muddy is how the contractor operates. Does the contractor it wrap their materials into their invoices to you, into your bills? Then [00:16:00] you include the materials in the 1099 if they itemize their bill to you, and there's a line for services and a line for materials, then you can exclude the materials and just pay for the services.

Alicia Katz Pollock: If they invoice you separately, then you just ignore it. And so you just if if you are able to just send the 1099 for services, do so and let the materials take care of themselves Essentially, the IRS knows that you're paying them the full price [00:16:30] for the whole service, and it's up to the contractor to do their own deductions for their own material costs. All right. Now the next qualifier is how did you pay? You don't have to send 1099 for all the work that's done. You only pay if first of all, they've paid more than $600 in a calendar year. And then also if the payment came from your bank account. So we're talking cash checks [00:17:00] online bill pay, ACH bank transfers, wire transfers. Zelle. So your bank account is the source of the funds. So if you pay them by a credit card using merchant services. So credit cards, debit cards, those are exempt. Now where it gets trickier is with PayPal, Venmo and other payment platforms. It really depends if you have the business version or the personal version. And [00:17:30] if you're paying friends and family or you're paying for goods and services. So if you have the business version, you are going, you're off the hook because the business version actually sends their own 1099 k.

Alicia Katz Pollock: So PayPal sends 1099 credit card companies send 1099 Venmo for business sends 1099 KS. So if you paid by some sort of payment settlement entity or some sort of payment rail, [00:18:00] a lot of the time you are off the hook for sending it. Now, how do you know if it's a third party merchant service processor? Does it charge a transaction fee? If it charges you a transaction fee, then you don't need to send a 1099 for it. Also, if it has its own bank account, like PayPal has a bank balance and Venmo has a bank balance, that usually means that you're off the hook for sending your 1099 for those as well. Now, the merchant services that are sending the 1099, [00:18:30] they have different threshold than we have. Theirs is actually $20,000 and 200 transactions, and that was supposed to change down to $600 just like us. But the one big beautiful bill maintains the former standards. And they kind of kicked this can down the road. That does mean that there's a gap between what you are forced to to qualify and what the merchant service has to qualify. And so if you're [00:19:00] paying them more than $600 but less than $20,000 by credit card, it's not getting reported at all. And that's okay. At least it doesn't matter to us. Now, I go into a lot of detail about this in my 1099 class. I really get into the weeds about it, so definitely check out my ROI.

Alicia Katz Pollock: 1099 class for a bigger conversation on [00:19:30] it. But again, I also want to give a shout out to Jennifer Diamonds 1099 problems, which is a web service specifically about 1099. And what I like about it is that she has this interactive matrix of like, is it PayPal, friends and family? Then you do is are you paying by millio? Ach, then you don't. Are you paying by ramp? So they go into all of the she goes into all of the different fintech options, [00:20:00] and what qualifies for a 1099 neck and what qualifies for a 1099 K, so I can't recommend it highly enough. In fact, if you go to 1099 and use the code Royal Owls 1099, you will get 1099 99% off your subscription, so definitely check it out. So kind of the bottom line is if you paid for a service and it came from your bank account and it's more [00:20:30] than $600, you're going to send a 1099 if it's reportable by a 1099 K merchant service, exclude it. And the bottom line on all of this compliance is that the IRS really only wants to know if the contractor reported on their taxes income higher than the amount of 1099 they received. So if they receive 1099 for $200,000 [00:21:00] in total, and they have claimed $250,000, the IRS could give a hang. It's only if the the 1099 totaled $300,000 and they reported $250,000. Then that's the red flag that triggers the audit on the company.

Alicia Katz Pollock: So, you know, other than just comparing the grand totals, nobody is really paying attention. Irs is short staffed and low, and it's not low hanging fruit. All [00:21:30] right. So that's my soapbox about what 1099 are and why you need to care and why you don't have to stress it as much as you think you do. But now what I want to do is I want to get into QuickBooks tools to help you manage this. And the reason why I really want to emphasize this is I have been watching the socials and people are talking about like, which report do I run so that I can filter out for the $600 [00:22:00] and for the payment processors? And how do I export to Excel and do all of this hijinks? And the truth is, is that, yeah, I don't need to. Quickbooks has tools that will do the analysis and the filtering for you, and you can use QuickBooks online to to file the forms or you don't have to. You can form you can file externally and especially with solutions that synchronize to qbo or import the data from Qbo. So you can use QBO tools to even [00:22:30] just do all the analysis and dial it in and get it prepped, and then turned to a third party tool to do the filing or hey, you're there, you might as well just go ahead and file those 1099. All right.

Alicia Katz Pollock: So I'm actually going to start the part about QuickBooks with a hot tip. That's what I call my royal wise owl's hot tips that help you do things. And the first one is that in QuickBooks online we use an expense form for just about everything. Okay. So there's bills and there's bill payments [00:23:00] and the bill payments. If the payment came from a credit card, it's going to get excluded. And if the payment came from your bank, it's going to be counted with an expense. You can use expenses to come from literally anywhere. A bank account, a credit card, a clearing account, literally anything. So there's a trick that you can use in the expense. There is a ref number field. And now note there's also a payment method field. And you know, [00:23:30] you would think that the payment method would be the thing that would allow you to do the exclusion. Hey, I'm telling you, it's a credit card. But no, it doesn't work that way or they haven't taken my advice yet. I've been putting in this feedback for years, but what does work, and it's a carryover from desktop, is the ref number field on all of your expenses gives you the ability to exclude the transaction from the wizard. So if you [00:24:00] put in the ref number field, debit or or card or debit card or visa or Mastercard or MC or even Chase discover PayPal, Amex, any of those. The wizard knows to exclude those payments.

Alicia Katz Pollock: So that's a really, really slick trick. Now, I also mentioned the contractors center in QBO, and the contractor center is found under expenses and get paid, although if you [00:24:30] have payroll turned on, you'll also see contractors there. The Contractors Center is both a place to manage all of these vendors who are eligible for 1099, and it's also a place where you can go to pay them as well. What's cool about the Contractor Center is that you can invite a vendor to self on board themselves. You can fill in their name and their email address and send them an email that they can log into their QuickBooks [00:25:00] if they're a QuickBooks user, and it will automatically fill in, quote unquote, a digital w-9 form for you so that you'll know if they qualify, and then it will auto fill their address and their vendor status and their whether you should track them for 1099 or not. If they don't have a QuickBooks account, it gives them the opportunity to create a free account to QuickBooks money, which is an app on your. You can find it in your app store for your phone. And essentially [00:25:30] QuickBooks money is a. It's a window to QuickBooks checking, but the contractor can use it as a place to store their personal information so that they can fill in your W-9 electronically through QuickBooks. And then everybody gets a copy in their portal. And then if the contractor wants, they can turn that into a Qbo subscription.

Alicia Katz Pollock: If you are going to use this and send it to them digitally, tell them to look for it because it looks like spam. It just says QuickBooks needs your w-9 [00:26:00] and bank info and you know who is going to click that and go, oh yeah, sure, I'll give you my w-9 and my social security and bank info. So if you are going to use this tool, make sure you tell the contractor that yes, it's legit and you really do want it. So when they fill it in, it'll get their name, their address, their social security number, their business entity and whether or not they qualify or not. All right. So for those [00:26:30] of you who are watching on YouTube, I am sharing my screen. So for those of you who are listening on your favorite podcast app, you could also go to our YouTube channel and see this as well. So here I am in what I call wild style construction, which is my fake company, and I'm going to go down to all apps and then up to expenses and bills. And then I can see the contractors center. And once you're in the contractors center, if you have checked off any vendors, uh, [00:27:00] in their vendor details with the checkbox for track 1099, they show up here or again, as I said, you can invite them and it will create their, um, their accounts here for you.

Alicia Katz Pollock: And then when you want to pay your contractors, you can click the pay contractors button and, and run your payments. You could just be marking them as paid because you're sending paper checks or you're paying through an external service. But you can also pay your subcontractors. If you [00:27:30] are subscribed to Qbo payroll, then it will treat your contractors as employees and just pay you your your per employee charge for those contractors. And you can pay them as many times as you want during the month. You can also subscribe to a special contractors edition for 1050 a month. So for just ten bucks or under $11, you can pay up to 20 contractors. Um, and then it's only $1.70 per extra contractor after the first 20 contractors. [00:28:00] And then of course, you can also use QBO as bill pay in order to pay them as well. Now, the highlight for me of the 1099 center is the preparing your 1099 or even filing them as well. So when you're in the contractor's center, there's a prepare 1099 button. And in the new navigation, they've actually changed the navigation so that when you go to all apps and go to the expenses and bills section, there is a brand new 1099 [00:28:30] area specific to your 1099. Now, once you go there, there's two different buttons. One is for there that says try Autofilled forms, and that's using their automated wizard and their AI to do your 1099 forms. And there's also prep my own via QuickBooks, and that means that you manually have to walk through the steps and do all the filtering.

Alicia Katz Pollock: Now, I've tried it this year and honestly they came up with the same information. [00:29:00] So if you have a low information client who is running their own 1099. They can go in and try the automated forms and file that way. Or if you want to do it manually and just do your due diligence and make sure you can use the prep tools to walk through the process. And then as I said, either file yourself or use a third party tool. Now the pricing difference on the on the two. If you let QuickBooks do all the prep for you, your first three forms are [00:29:30] 17.99 per form. And then it it scales down. Forms 4 to 20 are 13.99. And if you have more than 20 forms it goes down to 9.99 per form. If you want to go a little bit cheaper and do the work yourself, when you do the Prep my own section, then you do all the button pushing and filtering. Then it goes down to 5.99 per form for the first three, 4.99 for the next 16 [00:30:00] forms. And then if you file more than 20 forms, it goes down to 299 per form. So the more you file, the cheaper it is. What I want to do now is kind of walk you through the process of what happens inside it.

Alicia Katz Pollock: And I'm going to do it by demoing the the manual method, so that I can talk you through all the tools and all of the features. But either way, whichever one you choose, the first thing it does is it verifies your your company's legal information, your email, your business address, and your Ein number. Then [00:30:30] it goes through and it gives you a list of accounts that you use to pay your contractors and vendors, and then maps each one to a 1099 box. There's a button that you can click to select the accounts, and what I recommend is that you pour through your chart of accounts, and you look for any possible account that somebody might have been paid for, who might be a contractor. So you want to be thorough. You [00:31:00] don't have to say, well, no, I didn't pay them in that category this year. You count it. And so, you know, like I said, you want to be as detailed as possible. So pick every single category that you might pay an individual to do services for you. Again, if it's corporations, you don't have to do corporations. So, you know, you don't have to do insurance and you don't have to do licenses and permits and meals and entertainment and all of that stuff. We're really focusing on the [00:31:30] bookkeeping and accounting and professional services and repairs and maintenance and advertising and promotions is a big one. So those kinds of companies.

Alicia Katz Pollock: So once you make your list, then you go through and you map it to the different boxes on either the 1099, NEC or misc. Most of yours are going to go to box one on the 1099 NEC. See your independent landlord is going to be box one on [00:32:00] a 1099 misc. And there are other less common fields on a misc form. There's royalties and medical payments and fishing boat proceeds and gross proceeds paid to an attorney. Now, by the way, that's not just regular legal fees. Gross proceeds paid to an attorney means that you won a lawsuit and your attorney, or maybe lost a lawsuit, and you're and you're paying the attorney out of the proceeds from the from the lawsuit. Okay. [00:32:30] So that's the next step is manually going through. Do note that there are two reports, links that you can run right from that screen. And it runs in accounts to pay vendors and vendors your transactions reports. So you have two different reports that you can then go in and analyze and and filter. Now, what I do with those reports is I go in and I customize [00:33:00] them, and I turn on the track 1099 status and then filter it so that the status is on and that the amount is greater than $600. And then that way, instead of looking at the big list of all the payments for all the vendors, for everybody, I just focus on the payments that are specific to the, um, to the people that we're talking about.

Alicia Katz Pollock: Okay, so that's my little, uh, cool trick on that one. Now, [00:33:30] after you finish picking all of your accounts and you click next, then it goes into the who are you paying? And it instantly starts by filtering for the vendors that you have checked off the track, the tracking for, and you've told them and it immediately filters that they're just over $600 and that they were not paid by a credit card or other payment rails. And the thing to watch out for on this box is that there's [00:34:00] a dropdown for reportable payments, and then you can hit the dropdown for Non-reportable payments and see who else did you pay and why. Is it Non-reportable? Is it because they were paid by credit card? Is it that they didn't meet the threshold? So it'll pull up all of your 1099 vendors who you don't need to send the 1099 to. Then there's another tab for not tracked for 1099. And that brings up your list [00:34:30] of all the vendors who you did not check off as being eligible for 1099, and it's absolutely worth looking through this list and seeing if you missed anybody. You're going to look for individual names. You're going to look for companies that don't have Inc after their names. And by the way, if you send a w-9 to somebody and they show that they're an S Corp or a C corp and you don't need to send it to them.

Alicia Katz Pollock: Change their vendor display name so that it includes Inc at the end. And [00:35:00] then you just know visually that you don't need to send it. So in any case, you go through your whole list of vendors and do your due diligence. And anybody who may possibly qualify, there's a link to click that you can click on to add to the track list. There's even columns in here that show the non-reportable totals and reportable totals. And you know, if you don't see any numbers in these totals, it means you didn't even pay them this year. So you still should bother if maybe you might use them again. But [00:35:30] if you didn't pay them this year and there was no qualifying payments and you're not going to pay them again in the future, then hey, you don't have to do anything at all. So those are the main steps for filtering. So by the time you make sure that you've got all your categories and that you've got all the right vendors, the system itself will self-select them down to the people who you have to send the 1099 to. And even if you have hundreds of vendors through the year, depending on your industry, you may only wind up with one, two, or three 1099 [00:36:00] to send. Unless your business is completely dependent on 1099 contractor work, in which case you might have hundreds. Okay, so let's say you've done your due diligence.

Alicia Katz Pollock: You've been through. You're satisfied with your list. You collect, you click next, and then it has you preview to make sure that everything is all hunky dory. And you click next again. And then it looks at your state filing requirements. Now, [00:36:30] some states participate in the combined federal and state filing program. And the states that do you don't have to do anything else. Once you file through QBO, it will file with that state as well. But if you're sending 1099 to contractors who live in states that are not part of the combined federal state policy, or you. You live in a state that doesn't. You still may have to file with your state. Some states don't have a 1099 filing at [00:37:00] all. So you really have to know what what is happening in your state. If you need to file with your state and they're not part of the combined program, you're going to have to export a report out of QuickBooks and head over to the state's website to do the filing. Now in I'm in Oregon, and it stinks for me because QuickBooks doesn't export any kind of report that I can import into Oregon's filing system. So I wind up having to type them all in by hand, or copying [00:37:30] and pasting everything into a spreadsheet, so it's kind of a drag. And for that reason, I actually use a third party app for my 1099. My favorite go to third party app for filing has always been track 1099, which was owned by Avalara, and they do file with the state for you and the payment.

Alicia Katz Pollock: The price per 1099 is actually lower than QBO, so I always use QBO to dial them in and then head [00:38:00] over to track 1099 and do my filing. However, I have heard rumors I haven't tried it myself yet that you have to be using Qbo plus an advanced starting this year. In the past, it didn't matter what version of Qbo they used, but I have heard that if they're in essentials and below, track 1099 does not work anymore. Another one that's popular is tax 1099. I've also heard of Tax Bandit, but I've never used it. So at [00:38:30] this point you are either now prepped to do your filing externally, or you're ready to file inside Qbo. And then it starts the pricing and it gives you the option to sign up for contractor payments right away, which gives you that 1050 a month, and then you don't have to pay for your 1099 filing, or you can start your filing process now. Note that this is just electronic filing. If you want to send them on paper as well, then [00:39:00] there's a per form price. Now once you continue on and do it, continue on to the e-filing. What this actually does is sends the contractor an email. If you're using workforce and QuickBooks time and running it through payroll, they can actually get it through their workforce app as well.

Alicia Katz Pollock: Um, if you are an accountant user filing on behalf of your clients, you also have the option of paying for it [00:39:30] yourself, or switching to the client's payment method and having your client pay for the forms directly. So that's all part of the filing process. Now, what do you do if you make a mistake? Qbo does allow you to file corrections. You do have to wait until the filing has been accepted by the IRS. They have to have it in their hot little hands before you can file a correction. But if you sent one that you weren't supposed to send, you can then replace [00:40:00] it with a $0 1099. Or if you forgot somebody, you can file as many times as you want, and if you have a mistake, you can replace it as well. And the other ones like track 1099 and tax 1099 also allow you to do the same thing. All right. So that's my soapbox about using 1099 and doing your 1099 in QuickBooks, as well as the things that you need to know about it. As I mentioned, my go to resource [00:40:30] is 1099 problems. And that's where I go to ask questions for who needs it, who doesn't need it, and to go look up all the infinite combinations of fintech because, you know, with all the fintech payment solutions that we have out there, all these third party banking apps that we have, and different kinds of payment methods and payment apps, the IRS regulations were not built for the modern age.

Alicia Katz Pollock: And so Jennifer Dimon has gone through and combed through [00:41:00] every single payment settlement entity and all the ramifications and put them together in a searchable matrix so that you can really see if you're supposed to pay or not. So huge shout out for them. And if you go to 1099 problems and want to sign up, please use Code Royal Owls 1099 to save 10.99% off of your subscription. All right. So, uh, thank you for joining [00:41:30] me through my, uh, turbo explanation of 1099. This is kind of payroll season for me. My 1099 class is not just a standalone class, but it's also part of what we call the Payroll Perfection Bundle. And we are about to also teach Qbo payroll, QuickBooks time, and a Payroll compliance class with Shannon Bauman. And so you can get any one of these classes, or you can sign up for the whole entire bundle. [00:42:00] So that's what's going on in my world. I am just immersed in payroll at this time of year. So hopefully you got some good nuggets of information and some actionable takeaways. Please do join us on on LinkedIn in our unofficial QuickBooks Accountants Podcast User group. If you have any questions to ask or come find me on. Com. This is Alicia Pollock and I will see you in the next one.