Can’t remember if you collected a W-9 for that contractor your client added during their busy season last year.
Missing contact information for a 1099 vendor because it was in an unusual account?
Wasting time you don’t have (April 15 always sneaks up!) triple-checking your various spreadsheets against QuickBooks?
Working with — and as — bookkeepers and accounts, the Keeper team has seen and experienced it all.
If you’re ready to do things a little differently in 2024, this guide will help you nail down everything you need to know about 1099 and W-9 forms and how to manage them flawlessly to eliminate the exhausting tax season sprint. 🏃
First up, let’s get on the same page with 1099 forms.
1099s act as a signal flare to the IRS. It’s an information return — aka, a method for reporting payments made for almost any non-employee income. There are 1099s for contractors and freelancers, rent and royalties, interest and dividends, stock sales and patronage, and even credit card settlements.
The components of 1099s consist of:
Here, we’ll discuss two of the most common 1099 forms,1099-NEC and 1099-MISC. Catch the FAQ section at the end of this article for a rundown on a handful of other types that professional bookkeepers and business owners should know about.
Back in 2020, the IRS reintroduced Form 1099-NEC: Nonemployee Compensation. The form was created to separate out, as the name reveals, non-employee compensation (how considerate of them).
A 1099-NEC is needed if:
Method of payment was made via check, cash, ACH, Zelle, or wire transfer — this excludes any merchant services or payment settlement entities (e.g., credit and debit, Venmo, PayPal Business)
While Form 1099-NEC is used to report independent contractor income, Form 1099-MISC: Miscellaneous Income is used to report other income, such as: rent, royalties, awards and prizes, attorney settlements, etc.
As a general rule, a 1099-MISC should be issued for payments of at least $600 made in the course of trade or business. You do not need to issue a 1099 for payments made for personal purposes.
In addition, Form 1099-MISC is used for payments of $5,000 or more for direct sales of consumer goods (box 7), although receiving these payments can also be reported as a checkmark in box 2 of Form 1099-NEC.
For a full breakdown on how to use these forms in 2024, check out the IRS’ instructions.
Recognizing the correct form to use in each financial scenario is a testament to a bookkeeper's or accountant's expertise. By ensuring the proper documentation of income through the appropriate 1099 forms, you’re not only maintaining compliance but also providing an invaluable service to your clients, positioning you as an indispensable asset in their financial management.
After verifying who needs a 1099, it’s important that each vendor or independent contractor fill out a W-9. It’s always best practice to request a completed W-9 form before payment is exchanged.
IRS Form W-9 is used to request the correct TIN (reminder, that’s taxpayer identification number) and verify the entity type from a vendor, company, or individual when non-employee income was or will be paid during the calendar year.
Keeper’s Prepare 1099s report will help verify which of your vendors or independent contractors already have a W-9 on file, and which still need one. Intrigued? Book a demo now or keep reading for more information on how Keeper can empower you to streamline the most annoying, repetitive steps of the 1099 process.
To stay abreast on any updates to Form W-9, check out the IRS’ informational page here.
It's the payer's responsibility to issue 1099 forms, and the recipient's to use them for their tax filings.
As a bookkeeper or accountant, you may find yourself on either end of this transaction, orchestrating the smooth execution of these forms — whether you're preparing them for a client's contractors or recording them for an individual's tax return.
When a form 1099-NEC or MISC is required, there are five different copies that must be included:
Timeliness is as crucial as accuracy. The IRS has set clear deadlines for when 1099s must be in the hands of the recipients and when they must be filed with the IRS.
Business owners have to compile all 1099-NEC forms and send the accompanying 1096 (mail or e-file) to the IRS by January 31st.
In the past, you had the option to prepare 1099s manually and make a visit to the post office. However, beginning in 2024, if you plan on filing 10 or more 1099s, you are required to do so electronically.
Failure to meet the 1099 filing deadline can lead to federal penalties that cost hundreds of dollars, which can grow into thousands over time. It's important to file as soon as possible, even if the deadline is missed, to minimize potential fines.
| Form | Due Dates to Deliver to Recipients | Due Dates if Filing by Mail | Due Dates if Filing Online |
| 1099-NEC | January 31, 2024 | January 31, 2024 | January 31, 2024 |
| 1099-MISC (no data in boxes 8 or 10) | January 31 2024 | February 28, 2024 | March 31, 2024 |
| 1099-MISC (data in boxes 8 or 10) | February 15, 2024 | February 28, 2024 | March 31, 2024 |
| 1099-B & 1099-S | February 15, 2024 | February 28, 2024 | March 31, 2024 |
| 1099-INT, 1099-DIV, 1099-C, 1099-R, 1098, 1098-T | January 31, 2024 | February 28, 2024 | March 31, 2024 |
File quickly using online portals like Track1099 or Tax1099.
The IRS also has a newer e-file program called Information Returns Intake System (IRIS). You will need a Transmitter Control Code (TCC) to use IRIS, which can take up to 45 days to receive.
In the intricate world of 1099 forms, Keeper emerges as a powerful ally for bookkeepers and accountants.
Keeper is a month-end close manager that syncs directly to QuickBooks and Xero. Thousands of bookkeepers and accountants use Keeper to manage multiple clients, automate client communication, catch and correct coding errors, track KPIs, generate stunning reports, and handle their teams’ tasks — all in one centralized tool.
With Keeper’s Prepare 1099s report, you can get everything ready for filing in a timely and efficient manner. See it in action here.
Instead of waiting until the last minute, with Keeper you can build 1099s directly into your monthly workflows to help with:
Want to learn more about Keeper and how we can help fix your 1099 process? Click here to schedule a demo. In a hurry? Sign up to get started for free in seconds.
What else is there to know about 1099s and W-9s? Here, we’ll answer some of the top questions we get, as well as cover a few specific quirks of 1099 filing.
What is a 1099?
A 1099 form is a tax document used to report various types of income received from sources other than a traditional employer. This could include payments from individuals, businesses, or other entities like the government. The paying entity issues 1099s. When an individual receives a 1099, it indicates they have received income which they must include on their tax return.
What other types of 1099 forms should I know about?
Each 1099 form corresponds to a specific type of income or transaction. As financial stewards, accounting partners must recognize and understand the distinctions among them. Here's a breakdown of the most common 1099 forms you'll encounter beyond 1099-NEC and 1099-MISC.
Form 1099-K: Payment Card and Third Party Network Transactions
With everyone swiping cards and using apps like Venmo, PayPal, and Zelle (to name a few), it's good to know about Form 1099-K.
Form 1099-K is used for payments made via a payment settlement entity. Think of any credit card, payment card, or third-party network transaction.
If payments are made or received in this manner, Form 1099-K will be provided for the total transaction amount.
Historically, the issuance of this form was contingent upon individuals exceeding 200 transactions or accumulating transactions exceeding $20,000. The IRS is planning to eventually revise that threshold downward to $600. The first step in this change is expected to be a new threshold of $5,000 for tax year 2024. At the time of this writing, the IRS is still gathering feedback and has not officially committed to either of these lower thresholds.
This change marks one of the biggest tax law shakeups in a while. Modifications to the 1099 filing requirements should significantly increase the volume of forms businesses are required to issue and maintain. As a result, more companies may be looking to engage accountants to navigate these changes — and more accounts may be looking to engage bookkeeping practice management software to handle a whole new level of 1099/W-9 administration and vendor communication.
For the latest news on 1099-Ks, stay tuned to this page from the IRS.
1099-DIV: Dividends and Distributions
If your client took money out of their business that was not a W-2 or loan repayment, this form might be applicable. Dividends issued to a shareholder of a C-Corp in the past calendar year may require Form 1099-DIV.
Learn more about 1099-DIV here.
1099-INT: Interest Income
Form 1099-INT is a record that a person or entity paid you interest during the tax year. This form is essential for anyone who lent you or your client’s business money, and interest of at least $10 was paid out in the past calendar year. It’s important to note that this form is not for accrued interest; rather it’s only for payouts of interest in cash or trade.
Find the latest on 1099-INT here.
1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-R is used to report distributions from retirement plans, which can include pensions, annuities, retirement or profit-sharing plans, IRAs, and insurance contracts. It’s a vital form for clients in their golden years or those who are planning for retirement.
The IRS covers all the ins and outs of 1099-Rs here.
1099-B: Proceeds From Broker and Barter Exchange Transactions
For clients who engage in the sale of stocks, bonds, and other securities, Form 1099-B reports the proceeds from brokered or bartered transactions. It’s essential for calculating capital gains or losses during tax filing.
Find the latest version of 1099-B and related resources here.
What is a W-9?
A W-9 form, provided by the IRS, is used to request the correct taxpayer identification number (TIN) and verify the entity type from a vendor, company, and individual when non-employee income was or will be paid during the calendar year.
What’s the difference between a W-2 and a 1099?
At a high level, the main difference between a W-2 and a 1099 is who receives them. Businesses issue W-2s to employees, and they issue 1099-NEC forms to independent contractors.
Should I issue a 1099?
If the details above left you a little confused, we’re happy to break it down for businesses and individuals who are simply looking for information on whether or not they should file. This helpful quiz from our friends at Hill Bookkeeping & Consulting will guide you through easily determining if you should file a 1099.
Who doesn’t receive a Form 1099-NEC or 1099-MISC?
Generally, 1099s do not need to be issued to corporations (C-Corp and S-Corp), or LLCs formed as corporations. However there are a few exceptions, such as: medical and health care payments, gross proceeds paid to an attorney, substitute payments in lieu of dividends, or tax-exempt entities that require a 1099-MISC form. You can check out the exhaustive list set out by the IRS.
Under IRS updates made in 2022, if you compensate a contractor through platforms like PayPal, Venmo, Stripe, or by using a credit card, you are generally exempt from issuing a 1099 form for them.
Do you have to submit a 1099 for business expenses paid on a personal credit card?
You do not have to issue a 1099 for anything paid on any credit card. Whether it's charged on a personal or business credit card is irrelevant, as the merchant services provider will send a 1099-K to the recipient for all merchant payment system receipts.
What about payments on combined services and products, for example screen printing?
This is a complex issue. Photographers are another example. When in doubt, send a 1099. The vendor should be reporting this income anyway, so there's no harm in it. They also are able to
deduct all their expenses on the tax return, so even if you have reimbursable expenses included in a 1099, it is not an issue. Some vendors argue it anyway, but that's just because they don't
understand how this works. If they have an involved and knowledgeable bookkeeper or accountant, they're less likely to be concerned.
How are attorney payments treated?
This depends on the nature of the payment. Gross fees payable to an attorney are reported on 1099-MISC (box 14). This may include litigation-related payments or settlements in a lawsuit paid to the attorney.
Fees paid for legal services are reported on 1099-NEC (box 1).
Do individuals who were paid interest on a loan to a business get a 1099-INT?
Yes. Any non-corporation who gets paid loan interest on a loan made to the business should get a 1099-INT. We see a lot of people forgetting to issue these. Thankfully, the due date to the IRS is much later for these, so you've got time to fix that if you’ve forgotten!
Are there special state requirements?
State-level regulations can get complicated fast. For example, some states participate in the Combined Federal/State Filing (CF/SF) program, some states don’t require business to file 1099s with them at all, etc. If you and your clients are operating in a state that has filing requirements or aren’t sure what regulations to follow, check with the IRS about your specific rules and deadlines.
Even knowing every single in and out surrounding 1099s and W-9s won’t save you from the beginning-of-year rush to collect all the information you need to issue dozens of documents in time for looming IRS deadlines.
The solution to avoid this stress during tax season — when there are plenty of other things to stress over! — is two fold.
Part one is about reframing 1099 management from a one-time, annual dash to a recurring element in your year-round workflow.
And part two revolves around streamlining elements of this workflow so you can sign off on the repetitive, manual tasks and spend more time on meaningful work.
Keeper aims to address both. With a focus on simplifying month-end closes, our software helps bookkeepers and accountants track 1099s and W-9s and gather all information to file them every month — instead of in one mad dash.
Keeper is also the best platform for automating error detection and porting corrections made inside Keeper right into Quickbooks and Xero so you don’t have to toggle between apps. Our branded Client Portal makes it faster to gather information you need from clients and their vendors. Together, these tools streamline work to make 1099 management less stressful.
