Common Terminology
This section contains an alphabetical list of terms that are common in Tax Reporting area, and a definition for each one.
1042-S Reporting1042-S Reporting
Vendors identified as foreign individuals,
foreign companies, and non-resident aliens are required to report
US earned- income to the IRS. The income is reported on an information
return using the 1042-S form.
1099 Reporting1099 Reporting
Entities that provide certain kinds of income
to reportable vendors must file an information return (Form 1099)
with the IRS. The information return shows how much reportable income
the vendor earned during the course of the tax year. It also shows
how much backup withholding or 3402(t) contract withholding was taken
against a vendor, if applicable.
1098 Reporting1098 Reporting
The 1098 form and its variants are used to report contributions and possible tax-deductible expenses with the IRS. In particular, the forms cover mortgage interest payments; contributions of motor vehicles, boats, or airplanes; student loan interest paid; and tuition and scholarship information. Advantage supports issuance of form 1098-F to report certain fines, penalties, and other amounts paid and form 1098-T for reimbursements made or refunds of qualified tuition and related expenses.
Backup WithholdingBackup Withholding
If the vendor is reportable, but has not
provided complete, accurate tax information, backup withholding will
reduce the payment amount made to the vendor based on a percentage
fee.
Factors that determine whether a disbursement
qualifies for backup withholding include: the type of vendor income,
whether the object or balance sheet account is reportable, and the
eligibility of the vendor itself.
Contract WithholdingContract Withholding
3402(t) Contract Withholding threshold and
percentage can be set up on the 1099P table. If Contract Withholding
is enabled, then vendors are subject to a percentage withholding for
payments, with exceptions. Contract Withholding will reduce the payment
amount made to the vendor. Refer to the “Contract
Withholding” topic in this user guide for more information.