QuickBooks New 1099 Processing - Step-by-step

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To help small businesses this tax season, Intuit Inc. has launched new features designed to take the pain out of preparing 1099s for both small business owners and independent contractors. Effective this month, all QuickBooks users can more securely collect necessary tax information and electronically deliver tax documents to the Internal Revenue Service (IRS) and contractors from within the QuickBooks product.

Cassie Divine, Vice President, Small Business and Self-Employed Group at Intuit said, “By adding an easy and effortless way for small businesses to distribute 1099s to contractors through QuickBooks Online, we are solving problems facing both small businesses and the self-employed.”

The new features are not only aimed at avoiding data errors and reducing the time spent tracking down contractor information by inviting contractors to enter their own tax information, but at streamlining the process whereby QuickBooks users can file and deliver their tax forms electronically.

QuickBooks New 1099 Processing - Step-by-step:

  • The process begins by adding 'contractors' within QuickBooks.
  • Small business using QuickBooks simply send their contractors an invite. You don't have to wait for your contractor to reply, Intuit will sen you a notification when the contractor has completed your information request.
  • The contractor then receives an email providing a link to a free Intuit account.
  • The contractor either creates a new Intuit account, or can sign-in to their existing Intuit account if they already have one.
  • The contractor can then securely share their information, which begins with the question "how do you file your taxes?"  Intuit is trying to determine if the taxpayer reports as a 'Individual' using a Social Security number, or as a 'Business' using a Employer Identification Number (EIN).
  • The contractor then provides their tax related information based upon the type of tax filing they selected. In the example below Suzy Q files as an Individual.
  • The contractor's information automatically updates your QuickBooks records. In fact they can use their Intuit Account to update their address data at any time and those change will be update in your QuickBooks.

Note: Contractors can even share their information with other small businesses that use QuickBooks when hired without re-entering their data.

  • When you have all of your contractors information then you are ready to use Inuit's hassle-free 1099 E-delivery and E-file service. Just click the Prepare 1099 button when you're ready to begin this process.

QuickBooks takes you to the 'Get your 1099 forms filed right' window to start the process.

This isn't a free service the e-file rates are: $14.99 for first 3 forms bundled, $3.99 for each form after that up to 20 forms, and $0 for forms +21.  (Note, according to the actual QuickBooks product there is a 'self' print and mail option, but when using that option you need to order a 1099 Kit ahead of time. I priced out one such kit at it was $95.99 for 25 forms)

Back to our processing of 1099s:

  • Click the green Let's get started button.
  • The Prepare 1099 wizard begins by having you confirm your own "Company Information".
  • The next step in the process is to 'categorize payments to contractors' by selecting the various QuickBooks accounts associated with the various types of 1099 Misc form reporting (based upon the 1099 Form boxes).
  • The third step in the process is to "review your contractors' info". If needed you can 'edit' any information directly from this window, your edits will update the information in your QuickBooks records.
  • The fourth step is to 'check that the payments add up,' this is your review of the payments you have made. QBO categorizes the various payment types and includes some of those within the data used to prepare this page and excludes other payment types. (Note: Links are available to on-line help to give you more information about why certain payments are included or excluded.

You have the option of selecting how the information is displayed, either using thresholds based upon standard 1099 reporting, looking at all amounts (including those below thresholds, or even including contractors not marked for 1099 eligibility).

  • When you are ready to actually prepare 1099s, click the green Finish preparing 1099s button. The wizard takes you to point where you select either 'Go to 1099 E-file Service' or 'Print and mail' yourself.

This is also the 'point of no return' for my demonstration since I can't very well file a 1099 for a fictitious individual, and I don't have a 1099 Kit or way of showing you the print process. 

If you choose the E-file service Intuit will deliver your 1099s only and via printed copies to your contractors for no extra charge. They will also e-file them with the IRS for you.