1099 Changes in 2020

December 30, 2020

1099 Changes in 2020 and how they relate to your SAP Processing

The IRS released new requirements for Non-Employee Compensation tax filing effective for the 2020 tax season: https://www.irs.gov/instructions/i1099msc. Pioneer is here to help our SAP B1 Ecosystem better understand these new tax requirements and provide a path forward.

Below are the changes to 1099/1096 forms in 2020:

New 1099-NEC Form Introduced

https://www.irs.gov/pub/irs-prior/f1099nec–2020.pdf

This form tracks non-employee compensation.

In previous years, this was tracked in Box 7 of the 1099-MISC. Now it is on the new form 1099-NEC.

1099-MISC Box Renumbering

https://www.irs.gov/pub/irs-pdf/f1099msc.pdf

On 1099-MISC, which is an existing default form in SAP B1, some of the boxes have been renumbered from what they previously were, requiring modifications to update the SAP layout to match the new form from the IRS.

New 1096 Cover Sheet Checkbox

https://www.irs.gov/pub/irs-pdf/f1096.pdf

Modifications to the 1096 cover sheet that now includes a check box for the 1099-NEC.

What’s the Best Way to Handle these 1099 Changes in SAP?

Since these changes were brought to our attention, we have been working closely with SAP to understand what adjustments need to take place to support these new requirements. Based on our research, testing, and discussions with SAP, we have determined three potential options to support this new requirement:

SAP Hot-Fix

SAP development is working on a Hot-Fix to accommodate the needed changes and expects to release a new patch by the end of January 2021. This will require an upgrade to SAP B1 v10.0. Given the deadline to file of January 31st, an upgrade may not fit the timeline.

Modify Existing 1099 Layouts in SAP

The following SAP layouts will need to be adjusted to match the new IRS form layouts:

1099 MISC

1099 MISC2

1096

Utilize SAP reports and custom query in combination with 3rd party website

Run the 1099/1096 report in SAP and export to excel. Include any other relevant information needed for tax filing.

Pioneer has constructed a custom query that will pull the basic required data that is available for use upon request. Please note that we require clients to compare custom query data against the 1099/1096 SAP report to ensure consistency.

The data can then be uploaded via excel spreadsheet to tax1099.com, or another similar site or software package, to process the relevant tax forms.

Please note that this site requires a small fee to utilize their services.

Beyond these changes to satisfy the short term requirements, we want to ensure that your company is set up to correctly process the 1099-NEC form in 2021. To do so, you will need to upgrade to SAP B1 v10.0 in 2021 which will include the new form and print layout for the 1099-NEC – this is Option 1 above. To prepare for this upgrade you can add the 1099-NEC form and box and update BP Master Data record for relevant vendors. This will allow you to start tracking the data on the new form 1099-NEC for 2021 and then the upgrade to SAP B1 v10 can be performed at any point during the year. Please follow the steps below to make these changes in preparation for the upgrade.

Adding the 1099-NEC Form to SAP

1. Follow menu path Administration > Setup > Financials > 1099 Table 2. Add a new row for the 1099-NEC form:

3. Click on the new 1099-NEC field and then click on the 1099 Boxes button to open the 1099 Boxes Setup form. 4. Add the new box name, description, and minimum 1099 amount. For the 1099-MISC form, it will be as follows:

Updating Relevant BP Master Data Records

1. Navigate to the Business Partner Master Data records that require updating. 2. Click on the accounting tab. 3. Update the 1099 form and box accordingly:

If you are unsure if these changes affect you, or if you are unsure how best to proceed, please feel free to reach out to our support team (support@pioneerb1.com).

Looking for more Training on 1099 Processing in SAP Business One? Check out our past training sessions below:

Find more SAP Business One Training Videos Here:

Christina Morrow

Christina was born and raised in Mesa, Arizona and is a graduate of Northern Arizona University. At NAU she majored in Anthropology with a double minor in Japanese Language and Asian Studies. After graduating, she lived in Nagasaki, Japan for 4 years and taught English as an Assistant Language Teacher. With a passion for learning, helping others, and being creative, she uses her skills to fill-in any blanks and assist and support Pioneer B1 on various levels. In her spare time she takes photos, does indoor Rock-climbing, writes stories, studies Japanese, and hangs out with her 3 cats.

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