Dynamics NAV and Business Central 1099-NEC Processing for Tax Year 2021
As the end of 2021 approaches, it's important to be prepared to for tax preparation, including issuing 1099s. If you process only a few 1099s, they can be done by hand; however, if you process a large number of 1099s, you may need help. A simple code modification in can make it easier to manage NAV or Business Central 1099 processing for tax year 2021.
In 2019, the IRS moved 1099 miscellaneous nonemployee income from the 1099 Miscellaneous form (Box 7) to the 1099-NEC, Nonemployee Compensation Form Box 1. On your purchase documents, you can specify that the document is 1099 liable, and you can specify the 1099 code for the vendor.
In response, Microsoft made adjustments, which were made available in the Cumulative Updates in 2020 for NAV 2016 through current versions as well as all versions of Business Central. If you were in the middle of a go-live, or haven't installed updates, you may need to do so to process your 1099's for this year. This is applicable for all versions of Dynamics NAV and Business Central on premises. You will need to modify some code, create a new report, and edit an existing report.
The new 1099 Form Box codes NEC-01 and MISC-14, and a new form, Vendor 1099 NEC, were added. The 1099 MISC Form now includes the change for the removal of Box 7 as Non-employee Compensation and restructure under the new 1099-MISC format for 2020 filing and beyond. NOTE: For Microsoft Dynamics NAV 2015 and earlier, the report will need to be pulled from NAV 2016 and brought back, as these versions are no longer under support, or you (or your partner) will need to develop a report.
In Business Central, the most common 1099 codes are already set up, so you are ready to generate the required reports. The codes are defined on the IRS 1099 Form Box page, where you can also add new 1099 codes. For each tax liable vendor, you can then specify the relevant 1099 code. With the Vendor 1099 Information report, you can review 1099 transactions paid during a specified period. At the end of the year, you can print 1099 transactions on preprinted forms. The IRS 1099 Form Box page provides the following tax forms:
- Vendor 1099 Div - Prints the federal form 1099-DIV for dividends and distribution. You can print all or specific 1099-DIV forms. The report uses the codes that apply to the DIV form amount boxes from the IRS 1099 Form-Box page.
- Vendor 1099 Int - Prints the federal form 1099-INT for interest income. You can print all or specific 1099-INT forms. The report uses the codes that apply to the INT form amount boxes from the IRS 1099 Form-Box page.
- Vendor 1099 Misc - Miscellaneous income - Prints the federal form 1099-MISC for miscellaneous income. You can print all or specific 1099-MISC forms. The report uses the codes that apply to the MISC form amount boxes from the IRS 1099 Form-Box page.
- Vendor 1099 NEC – Non-employee compensation – Prints the federal form 1099-NEC for nonemployee compensation. You can print all or specific 1099-NEC forms. The report uses the codes that apply to the NEC form amount boxes from the IRS 1099 Form-Box page.
It's important to make sure you're ready and not scrambling at the last minute when it comes to preparing for tax season. If you aren't sure that you have deployed the required changes, we suggest creating a test in your test database so you can be best prepared. Again, modifications for 1099 processing in Dynamics NAV and Business Central are simple, and we're glad to help. If you would like help with 1099 processing in NAV or Business Central, contact ArcherPoint Support today.
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