As some of you are aware, tax year 2020 will bring a new 1099 form, the 1099 NEC (NonEmployee Compensation). With it, will bring some new changes.
Every couple of years the IRS doctors up existing forms by sometimes adding boxes, removing boxes, or by moving box X to box Y. While 1099 accumulation data begins at the beginning of the calendar year, the box changes from the IRS are often not finalized until August/September of the calendar year. The way Sage 500 deals with this is that users should continue to use the form and box numbers from the previous year. Then at the time of Sage supplied 1099 updates, and box reorganization will be remapped at update time. So lets say some form's box 5 in 2019 changes to box 8 in 2020. The user would continue to log the invoice accumulators to box 5 and when the 1099 update becomes available later in the year, box 5 entries are converted to box 7 on any existing invoice records with a box 5 amount.
In 2020, what is the most likely 2019-MISC box to be used, box 7 for non-employee compensation, will move to not just a new box, but a new box on a new form, Box 1 of the new 1099-NEC form. This seems a little more complicated and potentially worrisome for users, but it is really just a variation of moving a box on the same form. In the 1099 updates later this year, any amounts accumulated for 1099-MISC box 7 will be redirected to 1099-NEC box 1 at update time. So until the 2020 1099 updates become available in Q4, continue to accumulate under 1099-MISC box 7, and do not fear that a 1099-NEC form is not available for selection at this time. Fortunately, there are no new fields on the 1099-NEC form as they are moved or copied from the 1099-MISC form. It could have been an issue if the new form had a new box that did not map to any previous 1099-MISC box.
In 2020, it may be likely that many 1099 recipients of yours will now receive only a 1099-NEC form if the main reason for the 1099 was previously amounts in 2019's 1099-MISC box 7. Depending upon the recipient's data, a recipient may now possible receive only a 1099-MISC, only a 1099-NEC, or both.
Sage 500 ERP still has some work to do on how to handle these changes on the user's screen for 2020, but we are working on it. And the currently lack of a 1099-NEC form and box number will be dealt with as part of 1099 updates, which as you recall, are independent of our product updates. Also keep in mind that regardless of your installation's product update status, the last 1099 update (not necessarily last year's) must be installed prior prior to the 2020 1099 update. Tax year 2019 did not require a 1099 update, so that means the last update was likely tax year 2018.
Hopefully this adds clarity for more people than this may have confused.
