Entering Invoices for Suppliers Subject to Income Tax Reporting Requirements
If you set up a supplier as federally reportable and assign a default income tax type, Payables defaults the Income Tax Type (1099 MISC Type) to each invoice distribution you enter for that supplier. You can override the default Income Tax Type for an invoice distribution in the Distributions window of the Invoice Workbench. You can also use the Update Income Tax Details utility to make income tax type updates at any time before running your reports.
In the United States, you must report to the Internal Revenue Service certain types of payments you make to 1099 reportable suppliers. Within Payables, you can designate suppliers as federally reportable, classify their invoice distributions by 1099 MISC Type, then at the end of the year when you submit your 1099 reports, Payables lists payments of reportable distributions made to 1099 suppliers.
For example, you enter an invoice for a 1099 reportable supplier. The supplier's hourly fees are reportable for U.S. 1099 reporting purposes, but reimbursable business expenses, such as travel, are not. In the Distributions window for the fee distribution you assign an Income Tax Type; however for the travel distribution, you clear the Income Tax Type field.
Prerequisite
To record income tax information for an invoice:
If you are entering distributions by using a Distribution Set that does not include an Income Tax Type for any distribution, Payables automatically enters the supplier's default Income Tax Type. If the Distribution Set has an Income Tax Type other than the supplier's default, the Distribution Set overrides the supplier default.
3. In the Distribution Summary optionally adjust or review the Income Tax Type and Region for each distribution.
Clear the Income Tax Type field of any distribution that is not federally reportable.
Enter a Region to identify a distribution as applicable to United States state 1099 reporting requirements. If you enabled the Use Pay Site's Tax Region Payables Option, the default for Region is the state in the address for the supplier site for the invoice. Alternatively, you can also enter a default Income Tax Region in the supplier region of the Payables Options window.
Payables uses this information to group distributions by type and region on the 1099 reports. If you enable the Combined Filing Program Payables option, when you run your 1099 reports, Payables groups all reportable distributions by state.
See Also
1099 Reporting Overview
Entering Suppliers
Suppliers subject to income tax reporting requirements
Automatic Withholding Tax Overview