QB Tax Advisor Accounting

QB Tax Advisor

As a business owner, you are required to file 1099 information returns to report certain payments made during the year. While you can fill out 1099 forms manually and mail them in, electronic filing (e-filing) is faster, more accurate, and required by the IRS for volumes over 250 returns. Luckily, QuickBooks makes e-filing super simple.

Overview of 1099 E-File Requirements

First, let’s review some key facts about e-filing 1099s:

  • E-filing is mandatory if filing over 250 1099 informational returns in a calendar year
  • The IRS strongly encourages e-filing for under 250 returns as well
  • The deadline for e-filing 1099s is March 31. Mailed paper returns are due by February 28.
  • You’ll need to file Form 1096 electronically as a transmittal
  • Only files in the proper XML file format can be accepted

So in most cases, businesses should plan to e-file unless they have a very small volume of 1099s. The process is straight-forward once you understand the steps.

How to E-File 1099s in QuickBooks

Here is the process to e-file your 1099 forms using QuickBooks Desktop:

Step 1: Generate your 1099s

Use the 1099 Wizard in QuickBooks to prepare your forms:

  • Go to Reports > Vendors & Payroll > 1099 Wizard
  • Select the type of 1099 and tax year
  • Review vendor information
  • Map payment accounts to boxes
  • Preview forms for accuracy
  • Print copies to mail to vendors

This creates all your 1099s within QuickBooks.

Step 2: Create your electronic file

Once your 1099s are generated, you need to create the electronic file to submit to the IRS:

  • Go to File > Create 1099 E-File
  • Select the Tax Year and Form Type (1099-NEC, 1099-MISC, etc)
  • QuickBooks will compile your 1099 data into the required XML file format
  • Name and save the file on your computer

Step 3: Get an EFIN number

To transmit files electronically, you need an Employer Identification Number (EIN) from the IRS:

  • Go to irs.gov and search “Apply for an EFIN”
  • Complete the online application with your business information
  • The EFIN will be emailed to you immediately

This serves as your electronic signature.

Step 4: Submit your file

Now you can electronically upload your 1099 XML file:

  • Go to irs.gov and search “1099 Fire System”
  • Login using your EFIN and password
  • Select “Submit Information Returns”
  • Upload your saved 1099 XML file
  • Enter the Total Number of Returns
  • Submit the file

The IRS will send you an email confirmation that the file was accepted.

Step 5: Send 1096 to the IRS

Finally, you must mail in a paper Form 1096 transmittal:

  • Print Form 1096 from QuickBooks or the IRS website
  • Fill in number of 1099 returns submitted
  • Sign and mail to the IRS with Form 1096-T

And you’re done! This completes the 1099 e-file process with QuickBooks.

Tips for 1099 E-Filing Success

Follow these best practices when e-filing your 1099s:

  • Double check names, addresses, and TINs to avoid rejections
  • E-file by March 31 deadline to avoid late penalties
  • Have your EFIN ready in advance
  • Save an electronic copy of your e-filed 1099 XML
  • Print and mail Form 1096 with 1096-T transmittal
  • Check IRS status to confirm acceptance

Troubleshooting Common 1099 E-File Errors

While e-filing 1099s is generally straightforward, you may encounter some errors that reject your file. Here are tips for troubleshooting common 1099 e-file issues:

  • TIN mismatch – Double check that vendor TINs/EINs match IRS records. Update QuickBooks vendor profiles if needed.
  • Duplicate TIN – The IRS found the same TIN used for multiple vendors. Confirm unique TINs are entered correctly.
  • Address mismatch – Verify vendor addresses match their TIN records with the IRS. Fix errors in vendor profiles.
  • Incorrect XML format – Your file may not have properly formatted XML. Reprepare the file and conform to the IRS Pub. 1220 XML specifications.
  • Submission past deadline – If submitting after March 31, you may get rejected. Retry uploading the file after the prior year deadline passes.
  • EFIN issues – Confirm your EFIN is active and enter password correctly. Update your e-file application if needed.

Catching these common e-file mistakes upfront ensures a successful 1099 submission. Check for errors immediately and resubmit promptly within filing period.

Answering Vendor and Contractor 1099 Questions

Once you distribute 1099s, vendors may have some questions or concerns. Here are tips for responding:

  • Explain the purpose of receiving a 1099 – to report payments they received over $600 to the IRS.
  • Review what gets reported on a 1099 – gross payments for services or rent. Not reimbursements or goods.
  • Note the filing deadline for their own tax return is April 15, regardless of when they receive the 1099.
  • Payments on 1099 forms should match their own invoices and records. Ask them to verify amounts.
  • For minor corrections, file amended returns. For major errors, reissue the form.
  • If payments were under $600, explain they still must report the income, but you aren’t required to 1099 report it.

Address vendor concerns promptly and maintain positive relations. Provide helpful guidance on 1099 compliance.

Quick Summary of 1099 E-Filing Steps

To recap, here is how to e-file 1099s using QuickBooks:

  • Use 1099 Wizard to generate forms
  • Create XML electronic file
  • Obtain an EFIN number
  • Electronically submit XML file on IRS site
  • Mail in paper 1096 transmittal form
  • Verify acceptance status with IRS

E-filing your 1099s with QuickBooks ensures accurate, on-time tax form submission. You avoid manual errors, save time, and comply with IRS e-file requirements. Just follow the steps to create your e-file, obtain an EFIN, upload your returns, and submit the 1096. QuickBooks makes the entire 1099 e-filing process seamless.

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