Contract Employee Pay Types

You set up pay types for 1099 processing to accurately allocate earnings, other than wages, for contract employees. You use special handling tables to attach pay types to the year-end workfile build.

The Payroll system supports these IRS-approved pay types for 1099-MISC forms:

• Rents.

• Royalty payments.

• Prizes and awards.

• Other income.

• Medical and health care services.

• Non-employee compensation.

• Substitute payments.

• Excess golden parachute payments.

Contract employee information generally falls under the category of non-employee compensation. To transfer contract employee information to the workfile build process, the system requires this information for the pay type:

• Pay type code

• Pay stub text

• Tax exempt status

After you set up this pay type, enter the employee's pay-in-time entry and process it through the payroll cycle. The system prints checks and loads the pay amounts to history. To correctly process 1099 forms, it is strongly recommended that you use this process to load history amounts.

Run integrity reports to verify that dollar amounts and tax calculations are correct. If necessary, make corrections to the history tables before running the workfile build.