1099 NEC or 1099 MISC

Thanks for reaching out, @mjorgensen. I'm here share some details about issuing 1099-NEC or 1099-MISC twice for the same transaction in QuickBooks.

Yes, QuickBooks Online can issue 1099-NEC or 1099-MISC twice on the same transaction if required by law. To comply with IRS guidelines, payments made to attorneys in legal settlements must be properly reported. Payment to your own attorney for legal services exceeding $600 should be reported on 1099-NEC. Payment to opposing party's attorney should be reported on 1099-MISC if the payment is part of a taxable settlement. For payments that include attorney fees and amounts for the plaintiff, both parties must receive accurate reporting through 1099-NEC and 1099-MISC even if only one check is issued.

To issue two 1099 forms for the same transaction, one for the plaintiff and one for the attorney, you can follow the steps outlined below:
 

1. Select Taxes from the left-hand menu, then choose "Workers" and then "Contractors."
2. Select "Prepare 1099s" to begin the process.
3. Choose the option "Add another contractor to an existing form or submit another form" and follow the prompts.
4. Enter the same transaction information, but change the payee to the attorney and issue the 1099-NEC or 1099-MISC accordingly.

You can open this article to view details on which payments are not included in the 1099 forms: Understand which payments are excluded from a 1099-NEC and 1099-MISC.

I'm also adding this article so you'll be able to see other related information about 1099 and be updated with this form: Get answers to your 1099 questions.

You're always welcome to return to this thread if you have further inquiries about your 1099's experience in QBO. The Community experts are always here to provide guidance and support. Whether you drop a reply or create another post, we're just a click away.

Thank you so much Deb for your reply.  We were really stumped on how to proceed with the processing of the 1099-NEC or 1099-MISC on the same transaction.  You gave a clear explanation and steps to follow.  I REALLY appreciate your help and guidance.

Kind Regards,

MJorgensen

Thank you for returning to the conversation, Mjorgensen. Your thoughtful feedback on the guidance you received is greatly appreciated.
 

I'm glad the information provided by my colleague DebSheenD was instrumental in clarifying the process for handling 1099-NEC and 1099-MISC forms for the same transaction. It's always rewarding to know the assistance offered has been valuable and has resolved your concern.
 

If you have additional questions in the future regarding tax forms, financial reporting, or any related topics, please don't hesitate to reach out. Remember, no question is too small or insignificant when it comes to ensuring accuracy in your financial processes. To get in touch, simply tap the reply button below this message. I'll be happy to address your inquiries promptly and thoroughly, Mjorgensen.

Hello,

I have a few follow up questions about reporting 1099-NEC and 1099-MISC twice on the same transaction as required by law (legal settlements).  My first question is that wouldn't this be reported twice on the 1096?  In other words, if a settlement is for 100K but 50K is paid to attorney (50K on 1099-MISC) and 100K goes on 1099- NEC to Plaintiff, what would the 1096 look like?  Wouldn't that be considered double reporting of income?

Final question is when does the 2024 for 1099s open up in QuickBooks to file?  How can I add another contractor to existing form.  When you told me to follow the steps for the same transaction (and you listed the 4 steps), I do not have "Workers" or "Contractors" to select from the left-hand menu as you stated.  What I see is attached.  Please advise.  Thank you!

Great to see you back in this thread, Mjorgensen. I truly appreciate your continued engagement and the screenshot you've attached. Allow me to provide clarification and answer the follow-up questions you have regarding the 1099-NEC and 1099-MISC forms in QuickBooks Online (QBO). Your interest in understanding these forms demonstrates a commitment to accurate financial reporting, which is crucial for any business. Let's navigate this aspect effectively.

Regarding your initial inquiry, please know QBO can't issue both a 1099-NEC and a 1099-MISC for one transaction since only one expense category can be mapped to a single box on the form. However, you can divide the 100k settlement into two distinct accounts, each with 50k. You may then post one 50k entry to an account that is associated with 1099-MISC and the other 50k to 1099-NEC's account mapping. Additionally, I advise seeking guidance from the IRS to assist you in addressing this particular concern.

The e-filing for 1099 forms in QBO for the 2024 tax year is projected to commence around January 2025.

A single form corresponds to one contractor only. Therefore, if you have another contractor that requires a 1099 form, you need to prepare a separate one for them. Here's how:

1. Go to Payroll and pick Contractors.
2.  Tap the Prepare 1099s button.
   
   
   
   
3. Choose the contractor.
4. Follow the onscreen instructions.

For further information and detailed steps, check out this article: Create and file 1099s.

If you have other questions about handling 1099s in QBO, please share them in the comment section. Let's work through them together to ensure you have a clear understanding and a smooth filing process. Your success in managing these documents is my priority. 

Thank you for your reply, Camelle.  I do need to discuss this further with our Finance Manager to be sure all of our questions are answered before we proceed.  Can you please leave this (thread) conversation open until I can confirm with her to make sure there are no further questions.  She is out of the office this week and should return next week so that we can discuss further.

In the meantime, I do appreciate your help, and I will look into this a little further with the IRS as suggested.  The questions asked do pertain to attorneys in legal settlements and for payments that include attorney fees and amounts to the plaintiff in a legal settlement, so we want to be careful that we are not reporting income twice.

Again, I will get back to you if you are available once we discuss.

Kind Regards,

MJorgensen