1099 Reports - Multiple changes
The 1099 functionality is not all that helpful currently with the way US laws are.
From what I understand about 1099-Misc, there are three key things that determine whether or not you must provide for a regular vendor (there are lost of odd rules for attorneys and the like so I'm just writing about your regular vendor.)
1) Usually only applies to payments >= $600
2) Usually excludes Corporations
3) Usually excludes payments made by credit card or 3rd party network like PayPal due to 1099-K
From the IRS Website: Form 1099-K. Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC.
In fact from PayPal's website: Starting in 2011, PayPal is required by the IRS to report the sales of goods and services for customers who, in a single year receive more than $20,000, AND 200 or more payments.
I understand in Xero I can create rules based upon Groups (but have to first create at least one of your own groups...can't just use Everyone without having created a least one group) and can select the account code paid from and then specify the box the amount should go into on the 1099. But what it doesn't distinguish is whether a company is a Corporation or not (there is no field in the Contact area to clarify who is/isn't so have to manually go through and create a group for all non corporations.) Also, it doesn't have a way to exclude any payments made by credit card or 3rd party network like PayPal to accommodate the 1099-K exclusion. I haven't come up with a good work around since can't exclude certain bank accounts (PayPal, Credit Cards, etc). I'm also not clear if debit card purchases are considered to be credit cards and should be excluded as well. And what about the instance where a vendor is paid by check one month and credit card the next. Under the IRS rules only the checks if >=$600 would need to be reported if not a corporation so would need an intelligent way to separate the two.
Also, it would be awesome if there was a way to create the W9 and W8BEN forms in Xero based upon the information entered in the contact so far and send a link to your vendors to complete/verify the information so you knew at tax time the basic information was 100% current/correct in Xero. (W9 – http://www.irs.gov/pub/irs-pdf/fw9.pdf and W8BEN – http://www.irs.gov/pub/irs-pdf/fw8ben.pdf)
AdminXero Team
(Admin, Xero)
shared this idea
Hi everyone, we appreciate feedback and conversation on how we could improve Xero's 1099 reporting over the years.
Some time on from when this idea was first shared on Feature Requests - We've made lots of updates to Xero's 1099 and I'd like to round back on some of the ideas raised here.
👉 Majority of account types can now be selected in the rules set up
👉 We released Contacts Management which allows you to update a contact's W9 business classification, and a checkbox to automatically add them into a 1099 contact group, and select this group in your rules. If they're a corporation, don't tick the checkbox, and they won't appear in reports.
👉 As per IRS guidelines, any payments made via a credit card or third party network are reported on a 1099-K form.
👉 At this time we don't have plans for developing the ability to print 1099 forms - but you can join a request for this here
With the updates above, we're going to close the request here being too broad for members to understand exactly what they're adding a vote to, and share insights with product. Welcome to join other 1099 ideas that have been raised, or start one if you have a new idea so community can add their support, too.
