How to Track 1099-NECs
Coming up on tax time? Your MonkeyPod can help with that! If you need to issue a Form 1099-NEC (Non-Employee Compensation) to independent contractors or other service providers, your MonkeyPod can help you generate the data you need.
To make this work, your MonkeyPod needs two things to happen first:
- Let your MonkeyPod know who is 1099-NEC eligible using the 1099-NEC status on the Contractor card for any vendor.
- Make sure to tell your MonkeyPod which expense account(s) map to 1099-NEC eligible payments.
How do I mark a vendor's 1099-NEC status?
Your MonkeyPod tracks tax-related information for vendors in the Contractor relationship card.
Don't see the Contractor relationship card? Read the FAQ below!
To mark a relationship's 1099-NEC status, first enter their Tax ID Number (SSN or EIN) and upload a signed W9 Form by clicking the icons for those items in the Contractor card.
Then choose one of three options:
- Eligible to receive a 1099-NEC: choose this for contractors and vendors you'll need to issue a 1099-NEC to.
- Needs review: the default status. Your MonkeyPod will flag the vendor for review on the 1099-NEC report if you've paid them from a 1099-eligible expense account.
- Never eligible for a 1099-NEC: choose this for vendors who will never need a 1099-NEC, such as corporations, which are generally exempt from 1099 reporting. This permanently clears them from your "vendors to review" list in your 1099-NEC report, even if you continue to pay them from a 1099-eligible expense account.
Tip! The first time you pay a vendor or contractor who is eligible for a 1099, be sure to ask them for their W9 Form, upload it here in their Contractor card, and set their status to "Eligible to receive a 1099-NEC." It's a solid best practice to follow! Getting that set up promptly when you first pay any eligible vendor or contractor avoids a last-minute scramble to pull together your 1099s at the end of the year.
How do I map an expense account to 1099-NEC eligible payments?
From the Finance menu, choose Chart of Accounts.
Click the "Expense" tab to view your expense accounts, and then click the edit icon for the account you would like to make 1099-NEC eligible.
Scroll to the bottom and mark the account as "1099-NEC: Box 1 (Non-Employee Compensation)" and click Save.
How do I preview and issue my 1099-NECs?
From the Reports menu, choose 1099-NECs from the bottom of the "Accounting & Finance" section.
Your MonkeyPod then displays the "Issue 1099s" page with a short FAQ and a preview of your 1099-NEC data. Be sure to read all the information and check with your accountant!
Choose the correct year from the dropdown at the top of the preview. The banner underneath reminds you of the $600 reporting threshold for the year you've selected.
The preview breaks your data into four expandable sections:
- Payment accounts: the bank and credit card accounts included in the report.
- Expense account: the account(s) you've mapped to 1099-NEC Box 1.
- Reportable vendors: relationships flagged as 1099-eligible and paid $600 or more during the year. Use the filter box to search by vendor name, sort by name or reportable amount, and click a vendor's row to expand it and see every payment (check, credit card charge, or bill payment) that makes up their total.
- Vendors to review: relationships you paid that are missing a Tax ID or aren't flagged as eligible for a 1099-NEC. Each row shows the amount paid and a status badge like "Missing Tax ID" or "Not flagged."
For example, say your reportable vendors list shows Golden Fork Catering Co. with a reportable amount of $17,283.60. Expand their row to see exactly which checks, credit card charges, and bill payments added up to that total, which is handy for double-checking before you file or answering an accountant's question about the number.
Fixing a vendor without leaving the report
If a vendor shows up under "vendors to review," you can fix their record right there instead of hunting down their relationship page. Click the edit icon next to their name to open the Review window, where you can upload a signed W9, enter their Tax ID Number, and set their 1099-NEC status: Eligible, Needs review, or Never eligible.
Once you've reviewed the accounts, vendors, and amounts, click the Export 1099-NEC Data button at the bottom of the page to download your file. Double-check it before filing, since your MonkeyPod can't guarantee the data is complete or accurate on its own.
Frequently Asked Questions
How do I get the "Contractor" card to show up for my relationships? Do they have to be vendors?
You can add the Contractor Settings relationship card to any role!
The ability to track W9s, Tax ID Numbers, and 1099-NEC status is done through the Contractor relationship card. By default, this card appears for any relationship with the Vendor role assigned, but you can choose to have it appear for other roles as well. Go to Relationships > Manage Roles to see all your roles and the relationship cards that are displayed for each. Click the edit icon for the role in which you'd like to include the Contractor card, and on the next screen select "Contractor Settings."
What's the difference between "Needs review" and "Never eligible for a 1099-NEC"?
"Needs review" is the default status, and it's your MonkeyPod's way of flagging that it isn't sure yet whether a vendor should get a 1099-NEC. "Never eligible" is a permanent setting for vendors who will never need one, such as corporations. Once you mark a vendor "Never eligible," they'll stop appearing in your vendors to review list going forward, even if you keep paying them from a 1099-eligible expense account.