The 1099 Reporting Process consolidates vendor income and generates IRS form and correction data files that can then be imported into a third party tool to generate 1099 MISC, 1099 INT, 1099 G, 1099 S and 1042 S forms as well as Magnetic Media records.
The major input to this process is the 1099 Journal, which records all payments to vendors throughout the calendar year. Based on the 1099 reportability of a Taxpayer Identification Number (TIN) and the Income Return Type set on the Object, Sub-Object, Balance Sheet Account, and Sub Balance Sheet Account records, the 1099 process consolidates vendor income and stores this information on the Reported Income Table (1099I for 1099 reporting, 1042I for 1042-S reporting). Any reportable income paid to a vendor is updated to the Reported Income table, regardless of the threshold amount established on the Type of Income table.
Any records on the Reported Income table that exceed the threshold amounts specified on the Type of Income table (TINC for 1099 reporting, 1042T for 1042-S reporting) will be exported from Advantage as export text files which can be imported into a third party tool to create the appropriate 1099 MISC., G, I, S or 1042 S Form and Magnetic Media records. When the process is run in Testing or Forms mode, all records on the Reported Income table that exceed threshold will be exported, along with data files for Payer and Payee records. When the process is run in Corrections or Magnetic Media mode, only new records and records that have the corrected flag set to yes will be exported (both record types must exceed threshold). Regardless of processing mode, an export file will only be created if there are corresponding records for that form type on the Reported Income table.
Once the Offline 1099 Process determines if a transaction is reportable, they are consolidated in the following way:
For 1099 Journal records that are deemed eligible for 1099 reporting are then consolidated by the following fields:
Taxpayer Identification Number (TIN),
TIN Type,
Form Type, and
Income Type
1099 Journal records deemed eligible for 1042-S reporting are then consolidated by the following fields:
Recipient Account Number (inferred from the VCUST table),
Country of Residence (inferred from the 1099 Journal),
IRS Tax Rate (inferred from the 1099 Journal),
1042-S Recipient Code (inferred from the VCUST table),
1042-S Income Code (inferred from applicable COA code), and
1042-S Exemption Code (inferred from the 1042-S Income Code/Tax Rate table)
Because all new and corrected records are exported during the Corrections Processing Mode (bypassing threshold logic), if the dollar amount of a record on the 1099 Reported Income table or 1042-S Reported Income table needs to be corrected after a form has been issued to an amount that does not meet the threshold established for the Type of Income, it will need to be done in one of two ways:
Change the value after you have run the process in Magnetic Media Mode so that it will be picked up and a corrected form generated when the process is run in Corrected Mode.
Manually change the amount in the 3rd Party Forms generation tool.
Depending on the processing mode and settings on the 1099 Processing Options and Controls (1099P) table, four different reports may be produced by this process for 1099 forms: The Forms Generation Report, the Magnetic Media Audit Report, the Non TIN Miscellaneous Vendors Report, and the 1099 Transactions by Vendor Report. It will also produce the 1042-S Exception Report.
This process can be run at any point in Testing Mode. To generate 1099 Forms, the process should be run in January in Forms Mode. Later, the process can be run in Magnetic Media Mode to produce final documents to submit to the IRS. Finally, the process can be run in Corrections Mode to apply corrections.
For more information on the 1099 process, refer to 1099 Processing.
For more information on the 1042-S process, refer to 1042-S Processing.
For detailed information on the job (such as input, output, and process parameters), refer to the associated run sheet in the CGI Advantage Financial - Accounts Payable Run Sheets guide..