Whether you’re talking about a person or a business, it’s almost never too early to get ready for tax season. But when it comes to JD Edwards, business taxes, and 1099s, you’re going to want to plan ahead to ensure that your company has enough time to gather and update all the necessary information to get ready—at least a few months. That’s the first thing you need to remember to get your 1099s prepared ahead of tax season. Keep reading for the rest of our tips.
Limit Your Focus
By and large, businesses powered by JD Edwards need to concentrate on three main types of 1099 forms when preparing for tax season: 1099-DIV, 1099-INT, and 1099-MISC. The first deals with things like dividends, capital gain distributions, and investment expenses, the second with investment income (interest income, early withdrawal penalties, etc.), and the last with miscellaneous income, (rents, royalties, medical and health care payments, nonemployee compensation, and so forth).
BONUS: JD Edwards EnterpriseOne Payroll users will be pleased to know that the system generates information for Form 1099-R (Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.), so you won’t need to worry about Form 1099-R.
Related: Making a JD Edwards Vertex Installation Functional
Be Mindful of Your Software
It’s important that businesses use the 1099 software for the current tax year. The IRS often changes reporting requirements and forms. If you use 1099 software from a previous year, it might not be valid for reporting information for the current tax year (which would be…not great).
Figure Out How You Want to Prepare Your 1099 Forms and Your Records
You have a few options available to you when it comes to JD Edwards 1099 processing: the A/P ledger method, the G/L method, or a combination of both. Oracle has more specific instruction if you decide to go with one method or the other:
A/P Ledger Method: You can set up category code 07 in user-defined code (UDC) table 01/07 to identify the different types of 1099 forms and the specific boxes to use on each form. Alternatively, you can use the 1099 flag to specify whether a voucher or voucher pay item is eligible for 1099 processing if only one type of return is to be produced for only one specific box on that return.
G/L Method: You must set up AAI item PXxxxx to specify account number ranges for 1099 processing. These AAIs identify the different types of 1099 forms and the specific boxes on each.
The IRS is Particular About Addresses
You’ll need to make sure that the address book information you have for 1099 suppliers is in a format that the IRS allows: 1099 returns must have only three address lines, one of which should be the mailing name of the supplier. NOTE: The IRS allows for four address lines if the 1099 return has to have the legal name associated with the tax ID number in addition to the name of the supplier.
Don’t Forget About TINs
You need to make sure that you have a tax identification number (TIN) for every supplier that is to receive a 1099 form, as the IRS can impose penalties or fines for every 1099 return that you submit that has incorrect or missing TIN info.
It’s easy to see how complicated processing your company’s 1099 forms can be, but the JD Edwards Financial Management platform can help make that process a little less tricky. So long as you know what you need to do, keep your eyes on the prizes, and leverage the strength of JD Edwards, you’re going to do just fine.