How to Process 1099s in Dynamics AX

How to Process 1099s in Dynamics AX

1099s can be tricky, and the official documentation on 1099s in Dynamics AX is hard to work through.

So over the years, I have created this collection of tips to help Encore’s Dynamics AX clients save time and effort.

• Notice of 2021 IRS Changes
• Processing 1099 Amounts and Printing 1099 Forms in AX 2012
• Mandatory Fields for 1099s in Dynamics AX
• How to Find Missing Vendor Info
• File State 1099s
• 1099 Processing Rules in Dynamics AX
• Final Printing Export/Processing of 1099s
• Prerequisites for Electronic Filing of 1099 Statements (for AX 2012)

Note: If you’re using Dynamics 365 Finance and Operations, check out our Ultimate Guide to 1099s in D365FO instead.

Notice of 2021 IRS Changes

Before you start your 1099 process, you should know that the IRS has made changes to forms for tax year 2021. They have changed form 1099-NEC (3 forms per page instead of 2 previously), as well as added box 11 to form 1099-MISC, and made various other check boxes and electronic reporting changes.

There will be no new 1099 functionality released by Microsoft for Dynamics AX to handle these changes, because mainstream support ended Oct 12, 2021. Your only options are to export your 1099 data and use a 3rd party service such as www.Tax1099.com or www.1099Pro.com, or customize AX internally to accommodate the IRS changes.

Contact a Dynamics AX Partner for further advice and assistance.

Processing 1099 Amounts and Printing 1099 Forms in AX 2012

• Leaving aside the new IRS changes, AX 2012 can print 1099 forms as long as all the configurations are correct. These are standard laser forms sold at most office supply stores.
• AX assumes that you complete all 1099 info for every vendor before you pay them — because it tracks 1099 amounts in a separate table. If your 1099 vendor setups are incomplete, you need to complete the setup first and then recalculate each vendor to tally $paid for the vendor for the calendar year. Depending on the number of vendors you have, this could take a couple of hours.
• Depending on the version of AX, many clients find it more convenient to buy the $50 program at Office Max along with the laser forms and export the AX 1099 totals into it — and use the program to print out 1099 forms.

Mandatory Fields for 1099s in Dynamics AX

There are a minimum of 4 mandatory fields for each vendor, needed to produce proper 1099 forms:

• Report 1099. Nothing processes without this.
• 1099 Box (pick from drop-down list, e.g., MISC-07).
• Tax ID Type — EIN or SSN.
• Federal ID.

The DBA field is needed only for vendors with a DBA. The W9 received field is optional.

How to Find Missing Vendor Info

The best way to find missing 1099 vendor info is to personalize your vendor grid and filter on missing 1099 fields. Edit the Vendors form, and click the Tax 1099 FastTab.

On the Vendor Grid, you can filter on blank in the Report 1099 column, by using “” as your filter.

(Click to expand any screenshot in this article.)

File State 1099s

If you need to file state 1099s along with federal 1099 forms, a Vendor State Tax ID has to be attached to each vendor for each state where you plan on filing — otherwise the state bucket will be empty.

In the AP > Common > Vendors > All vendors form, click on Vendor state tax IDs in the top ribbon to set up the states where you have to report vendor payments.

1099 Processing Rules in Dynamics AX

If a range of vendors is chosen and the 1099 fields are not properly configured for a vendor in the range, the info log will display the vendor in question and continue processing the next vendor.

• Make sure you choose the correct dates, for instance 1/1/2021 — 12/31/2021
• This creates VendSettlement1099 records for all payments to the vendor and then summarizes the total payments into one 1099 Summary Record per vendor.

Use the existing Accounts Payable > Reports > 1099 Reports to check on the progress of your 1099 vendors. Make sure to choose the previous year as your reporting year.

Final Printing Export/Processing of 1099s

Final printing export/processing of 1099s is done from Accounts Payable > Periodic > Vendor Settlement for 1099s.

Prior to printing 1099 forms, in Org Admin, inside each Legal entities form, update all company contact information and the EIN number.

Click the 1099 tax FastTab. Select the Validate Tax 1099 data formats check box to indicate which fields have insufficient information when you enter 1099 data.

Prerequisites for Electronic Filing of 1099 Statements (for AX 2012)

Note: Because of the 2021 IRS changes, we no longer recommend electronic filing from Dynamics AX unless you have customized the system.

Set up the following information before you print 1099 statements or file them electronically or magnetically with the IRS:

• In the Legal entities form, enter 1099 data.
• In the 1099 fields form, verify the minimum amounts that are required for 1099 reporting for the current tax year.
• In the Vendors form, enter information in the 1099 fields for each vendor that will receive a 1099 statement. Click Set up > Vendor state tax IDs, and then enter all state 1099 information.
• To file 1099 statements electronically or magnetically, enter the required information in the 1099 software vendor and 1099 transmitter forms.

You must obtain a Transmitter Control Code (TCC) before you can file 1099 statements electronically. You can request this code from the IRS by using IRS Form 4419. You must include the TCC on all 1099 statements and enter it in the Legal entities form.

If you are filing 1099 statements electronically or magnetically, enter the TCC in the 1099 transmitter form. The first year that you submit electronic or magnetic files, you must first submit a test file to the IRS. If you file a paper copy of a 1099 statement, enter the company telephone number in the Contact number/address field on the Contact information FastTab in the Legal entities form.

If you plan to participate in the combined federal/state filing program, you must submit a request letter to the IRS. If accepted, the IRS sends Form 6847 for you to be completed.

For more information about electronic or magnetic filing, see IRS publication 1220.

For assistance and advice with customization, compliance, integrations or any other aspect of your Dynamics system, please contact us.

Read Next: 18 Warning Signs Your Business Need the Cloud

This post first appeared first on Encore Business Solutions.