1099-MISC and -NEC Changes: Immediate Action Steps for GP Users

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1099-MISC ChangesWhile we’ve been remote, the IRS decided to make changes to the way non-employee compensation is filed, depending on the nature of the income. They’ve moved the non-employee compensation from Box 7 on the 1099-MISC to its own form: the 1099-NEC. This would include all independent contractors, or self-employed individuals who previously had their payments reported in Box 7 of a 1099-MISC form. Preview (opens in a new tab)

In Dynamics GP, you USED to be able to specify a vendor as a 1099 vendor, and print 1099s and file them however you chose to. This year, with the new filing requirements, some action is needed.

Step One: Note the New Filing Date

First thing to note: the filing date for both is now January 31st each year – or whatever business day follows it – which this year is February 1, 2021. This includes submitting Copy B to each contractor. If you miss the deadline for filing with the IRS, you can apply for an extension, but you MUST still send Copy B to your contractors by February 1st, 2021.

Step Two: Check Your GP Version

Next thing to note is your version of Dynamics GP. If you’re running Dynamics GP 2016 or GP 2018, all you need is to install the year-end update. Your system will then be configured to handle the changes, and you can file as normal (keeping in mind the new filing date).

If you’re on an older version (or if you do not wish to apply the year-end update), proceed to step three.

Step Three: Export Data in the Proper Format

Crestwood 1099 Xport LogoIf at this point you cannot upgrade to a newer version of Dynamics GP that supports the new filing requirements, you’ll need a workaround. This is where Crestwood comes in. Our talented team of developers has produced an add-on called 1099-Xport that is:

  • Very inexpensive
  • Installs and connects to data in minutes
  • Exports in seconds

You will then take this file and use a third-party 1099 filing software. GPUG members recommend:

The penalties for missing the filing deadline can be steep. You must be sure you’re ready to go come tax time. Please reach out to Crestwood Associates with any questions.

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