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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Changes to 1099 report...
Finance | Project Operations, Human Resources, ...
Answered

Changes to 1099 reporting for 2020 - New 1099-NEC requirement

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Posted on by Community Member

There are changes that are required by the IRS to separate the NEC from the Misc figures for 1099 reporting:

https://www.irs.gov/instructions/i1099msc

What’s New

Form 1099-NEC.

The PATH Act, P.L. 114-113, Div. Q, sec. 201, accelerated the due date for filing Form 1099 that includes nonemployee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC. Beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.

See part C in the 2020 General Instructions for Certain Information Returns, and Form 8809, for extensions of time to file. See part M in the 2020 General Instructions for Certain Information Returns for extensions of time to furnish recipient statements.

Redesigned Form 1099-MISC.

Due to the creation of Form 1099-NEC, we have revised Form 1099-MISC and rearranged box numbers for reporting certain income.

Changes in the reporting of income and the form’s box numbers are listed below.

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.

  • Crop insurance proceeds are reported in box 9.

  • Gross proceeds to an attorney are reported in box 10.

  • Section 409A deferrals are reported in box 12.

  • Nonqualified deferred compensation income is reported in box 14.

  • Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.

Is Microsoft making changes in D365 to accomodate this new requirement?  If so, when will it be available?  If not, what is the recommended workaround?

Thank you,

I have the same question (0)
  • Verified answer
    Ajit Profile Picture
    Ajit 8,755 on at

    Yes. There is a hotfix f on top of PU 34.

    2020 1099 changes

    Product and version: Finance and Operations

    KB number: 4562836

    Fix type: Binary update

    PROBLEM

    This includes regulatory changes for the 2020 1099-NEC and

    1099- MISC types.

    DESCRIPTION OF CHANGE

    Implemented 2020 1099 changes: 1099-NEC support and 1099-MISC updates. Update includes upgrade scripts for the 1099-NEC and 1099-MISC fields. It doesn't include the format changes for printing or electronic reporting. The format changes for printing and electronic reporting will be included in a subsequent year-end release.

  • Clare45 Profile Picture
    Clare45 112 on at

    Hi Ajit Srivastava,

    Thanks for your answer. Are you saying we will be unable to print the 1099 NECs from D365, and that this won't be available until next year? Are we supposed to enter this manually, or will they release something in January 2021 so that we can at least print the forms from the system? Thanks for your help again!

  • Community Member Profile Picture
    Community Member on at

    The current KBs that address the 1099 process are as follows:

    KB4562836

    KB4564590

    KB4574407

    KB4577483

    KB4583020

    KB4586346

    KB4595482 – not released yet.**

    This last one is key as these changes include format changes for 1099-MISC, 1099-NEC, 1099-OID and the corresponding electronic file format. These changes include format changes for 1099-MISC, 1099-NEC, 1099-OID and the corresponding electronic file format. The changes are in alignment with the 2020 IRS forms/electronic specification.

    Once the IRS has finalized the format for the electronic format, this will be released.

    Be aware that you need to validate the Detail 1099 report to ensure that there are no MISC-07 remaining that should be NEC-01.  I have also found that purchase orders that were created prior to updating the Vendor master may still carry the MISC-07 when posting an invoice.

  • Community Member Profile Picture
    Community Member on at

    You might not be aware but the IRS will NOT be sharing the NEC-01 data to the States.  You will need to do that yourselves which would require setting up the State tax ID for the Vendors in reporting states and updating the transactions.

  • Clare45 Profile Picture
    Clare45 112 on at

    Hi, Do you know when the forms will be updated and available to print out?  For - KB4595482 – not released yet.*

    Will this be completed before the Jan 31 2020 deadline?

  • Community Member Profile Picture
    Community Member on at

    Yes, that is why Microsoft has not released it yet.  They are waiting for the IRS to finalize the electronic reporting format.

    I would guess that we will see the last KB available in a couple weeks.

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