Understanding the 1099 Flag
As an alternative to using category code 07, you can use the 1099 Flag field to specify whether a voucher or voucher pay item is eligible for 1099 processing. Unlike category code 07, the 1099 flag does not specify the type of 1099 form to use or which box on the form to use. It only flags, or identifies, a voucher or voucher pay item as eligible for 1099 processing, and you use a processing option in the Build A/P Workfile program (R04514FP) to specify the type of return and box. Typically, clients who do simple 1099 reporting and produce only one type of 1099 return with the same box use the 1099 flag.
To assign a 1099 flag to a voucher, enter 1 in the 1099 Flag field for each pay item on the Enter Voucher - Payment Information form. The value 1 includes the pay item in 1099 processing, and the blank value does not.
If you hire contractors (nonemployees), payments to them might be partially exempt from 1099 reporting. Reimbursements for expenses such as travel, lodging, and so on typically are excluded. For those expenses, you leave the 1099 Flag field blank and enter 1 in the 1099 Flag field only for those pay items that are subject to 1099 reporting.
For the current period only, you can change the value in the 1099 Flag field on posted and unposted vouchers by using the Standard Voucher Entry program (P0411).