You have probably heard by now, but the IRS has brought back the 1099-NEC form. The last time this form was used was in 1982, so you will have to get accustomed to it and make some adjustments. It is replacing the 1099-MISC form that you all are used to for all non-employee compensation. That includes the following:
- Vendor-based work
Why does this matter?
- Since the reintroduction of the 1099-NEC and resulting adjustments to the 1099-MISC are brand-new changes to the tax code, they are not available in past releases of Dynamics GP. To get it you must install the 2020 Year-End update.
- Unlike past Year-End updates, the 2020 one is critical for anyone who pays freelancers, contractors, consultants, or vendors, not just those who run employee Payroll using GP.
How does the new update help?
- The update will include new fields/choices for vendors and about the type of 1099 to print. It will automatically move anyone who was previously a 1099-MISC vendor to the 1099-NEC vendor.
- When installing the update, you must first run it against all company databases, updating the GP data. Then you must install the update on all GP workstations.
The 2020 Year-End update is only available to those on supported versions of GP (2016 & higher). If you are still on GP 2015 or earlier, we highly recommend upgrading to get this crucial update. If for some reason it’s not possible for you to upgrade to a supported version of GP, there is a workaround. But it does not change the data, it only modifies how the 1099-MISC prints.
We hope this information is useful in helping you prepare your 2020 taxes. Questions about the Year-End update, our workaround, or scheduling your GP upgrade?