2020 Changes to the 1099 Preparation Report

2020 onwards - changes to the 1099 preparation report

The IRSInternal Revenue Service changed the 1099-MISC form for the 2021 tax season. As a result, the order of the 1099-MISC boxes has changed in Zipalti's 1099 preparation report.

The IRS changes for 2021 are:

1. The title for the1099-MISC form has changed from "Miscellaneous Income" to "Miscellaneous Information".
2. In the 1099-MISC form, a new box, box 11, is added to the report, under section 6050R, cash payments for the purchase of fish for resale purposes, from an individual or corporation who is engaged in catching fish.
3. In the 1099-NEC form, box 1 is no longer being used to report any items under section 6050R with regards to buying fish for resale purposes.
4. You can use box 2 in the 1099-NEC form or box 7 in the 1099-MISC form to report any sales totaling $5,000 or more of consumer products for resale, on buy-sell, deposit-commission, or any other basis.

2020 IRS changes

The IRS changes are:

1. "Nonemployee compensation" (box 7) is no longer part of the 1099-MISC form. Instead, you need to use the new 1099-NEC form for filing out Nonemployee compensation.
2. Some of the boxes in the 1099-MISC form have changed:
   • Box 9 (Direct sales of consumer products for resale) in the old format is now box 7 in the new format.
   • Box 10 (Crop insurance proceeds) in the old format is now box 9 in the new format.
   • Box 15a (Section 409A deferrals) in the old format is now box 12 in the new format.
   • Box 15b (section 409A income) in the old format is now box 14 (Nonqualified deferred compensation) in the new format.
   • Boxes 4 (Federal income tax withheld) and 16-18 (state boxes) have been removed from both the old and new format.
   • Boxes 1-3, 5-6, 8 and 13 remain the same.

Using the 1099 preparation report in Zipalti

If you are using the Bills module, you can map your payments by pairing each GLA general ledger (GL) is used for recording transactions related to business assets, liabilities, equity, revenue and expenses. account with a 1099-MISC box via CSV or API. To support the IRS changes, on the "1099 preparation" screen, we added a new filter called "Report format" that allows you to download the report in the new or old format.

Removal of 1099-MISC and 1099-NEC boxes

We removed the following boxes from the 1099 preparation report (old and new format):

• Federal income tax withheld
• State tax withheld
• State/ Payer's state number
• State income

Any payments associated with these boxes are mapped to the box labeled "Payments not mapped to any 1099-MISC box".

New IRS report format (2020 onwards)

Prior to using the new 1099 preparation report format, it's crucial that you pair your GL accounts according to the new format to avoid any inaccuracies in the reported data.

The "New IRS format (2020 onwards)" includes the following 1099-MISC boxes.

Box number and value*	Description
Box 1 - Rents	The amount paid for rents during the year
Box 2 - Royalties	The amount paid for royalties during the year
Box 3 - Other income	The amount paid for other income (services) during the year
Box 5 - Fishing boat proceeds	The amount for fishing boat proceeds during the year
Box 6 - Medical payments	The amount for medical payments during the year
Box 7 - Direct sales of consumer products for resale	The amount for direct sales of consumer products for resale during the year
Box 8 - Substitute payments in lieu of dividends or interest	The amount for substitute payments in lieu of dividends or interest during the year
Box 9 - Crop insurance proceeds	The amount for crop insurance proceeds during the year
Box 10 - Gross proceeds paid to an attorney	The amount for gross proceeds paid to an attorney during the year
Box 11 - Fish purchased for resale	The amount for cash payments for the purchase of fish for resale purposes, from an individual or corporation who is engaged in catching fish
Box 12 - section 409A deferrals	The amount for section 409A deferrals during the year
Box 13 - Excess golden parachute payments	The amount for excess golden parachute payments during the year
Box 14 - Nonqualified deferred compensation	The amount deferred that is included in income under section 409A
(NEC) 1 - Non Employee Compensation^	The amount paid for non-employee compensation during the year
(NEC) 2 - Direct sales of consumer products for resale^	The amount of any sales totaling $5,000 or more of consumer products for resale, on buy-sell, deposit-commission, or any other basis
*These fields display only for payers using the Bills module. The amounts are based on the GL accounts mapped to these fields. The numbered fields correspond with the boxes on the IRS's 1099-MISC form.
^This field needs to be filled out on the 1099-NEC form.

Old IRS report format

If your ERP does not support the updates to the 1099-MISC form, which is the case for NetSuite 1.0 and NetSuite 2.0 payers who create and update GL accounts in NetSuite, the order of the 1099 boxes cannot be updated to the new format. Therefore, you need to use the "Old IRS format (pre-2020)" filter when downloading the report and make the relevant adjustments to the order of the boxes and numbers prior to filing out the 1099-MISC form.

The "Old IRS format (pre-2020)" includes the following 1099-MISC boxes.

Box number and value*	Description
Box 1 - Rents	The amount paid for rents during the year
Box 2 - Royalties	The amount paid for royalties during the year
Box 3 - Other income	The amount paid for other income (services) during the year
Box 5 - Fishing boat proceeds	The amount for fishing boat proceeds during the year
Box 6 - Medical payments	The amount for medical payments during the year
Box 7 - Nonemployee compensation	The amount paid for non-employee compensation during the year
Box 8 - Substitute payments in lieu of dividends or interest	The amount for substitute payments in lieu of dividends or interest during the year
Box 9 - Direct sales of consumer products for resale	The amount for direct sales of consumer products for resale during the year
Box 10 - Crop insurance proceeds	The amount for crop insurance proceeds during the year
Box 13 - Excess golden parachute payments	The amount for excess golden parachute payments during the year
Box 14 - Gross proceeds paid to an attorney	The amount for gross proceeds paid to an attorney during the year
Box 15a - section 409A deferrals	The amount for section 409A deferrals during the year
Box 15b - section 409A income	The amount for section 409A income during the year
*These fields display only for payers using the Bills module. The amounts are based on the GL accounts mapped to these fields. The numbered fields correspond with the boxes on the IRS's 1099-MISC form.

Downloading the 1099 preparation report for previous years (pre-2020)

When downloading the 1099 preparation report for any years prior to 2020, we recommend that you use the same format that you selected for 2020.

• If you updated the mapping of your GL accounts to match the "New IRS format (2020 onwards)" format, then use this new format for pre-2020 years. The payments will be mapped to the correct boxes but box numbers will have changed.
• If you could not update the mapping of GL accounts in your ERP to match the new format (as is the case with NetSuite 1.0 and 2.0 payers), then use the "Old IRS format (pre-2020)" for pre-2020 years.

FAQs

Does Zipalti support 1099-NEC?

Yes. All payments mapped as "Non Employee Compensation" are mapped to the "Non Employee Compensation" box in the 1099 preparation report.

Why do I need to choose a type of format before downloading the report?

If you are unable to update the1099 boxes to the 2020 IRS order (e.g., you use NetSuite to create and update your GL accounts), then you need to select the "Old IRS format (pre-2020)" to ensure payments are mapped to the correct box value.

If you are able to update the1099 boxes to the new format, we recommend that you use the "New IRS format (2020 onwards)" filter.

Why don’t I see the report format filter?

If you don't use 1099-MISC boxes as part of the Bills module, you won't see the filter.

Why would I need to download the report in the old format?

If you can't update your GL account box mapping in your ERP to the new order, you need to use the old format. For example, if you are creating and updating GL accounts in NetSuite 1.0 or 2.0, you won't be able to update the1099 boxes to the new order because NetSuite no longer supports any 1099 changes. To ensure payments are mapped to the correct box value, you need to select the old format to download the report in the pre-2020 order.

I need to download the report for a year prior to 2020. Which type of format do I choose?

Select the same format you would use when downloading for 2020. If you’re using the "New IRS format (2020 onwards)", please take into account that the payments will be mapped to the correct boxes, but box numbers will have changed.

How do I know to which boxes my GL accounts are mapped?

Please submit a request to our Support Team who can provide the list.

I’m using NetSuite and the 1099 boxes appear in NetSuite in their old (pre-2020) order. What do I do?

Since NetSuite no longer supports any 1099 changes, you won't be able to update the1099 boxes to the new order. To avoid any inaccuracies during payment mapping, select the old format to download the report in the pre-2020 order.

Why did you remove the federal income tax withheld/ state boxes?

We cannot support federal income tax withheld/ state boxes because these boxes are not mapped to a specific GL account like other boxes are. So we removed the boxes from the report. Please note that any payments associated with these boxes are now mapped to the box labeled "Payments not mapped to any 1099-MISC box".