There are several solutions for this:

• Each payee must be a Vendor AND marked as "Vendor eligible for 1099" (see Part 1, steps
  1-9).

• The QB Administrator must link an account AND a box on the 1099-MISC form (see Part 2, steps
  1-8).

• An eligible Vendor must have "Last Calendar Year" transactions in the account AND the total expense amount must be equal to or greater than the threshold amount (see Part 3, steps
  1-8).

Part 1 — Making a Vendor eligible for a 1099-MISC form:

1. From the Vendors menu, choose Vendor List.

2. Select the vendor for whom you want to file 1099-MISC forms.
3. Choose Edit from the Vendor menu button.
4. On the Address Info tab, make sure:
   • The vendor's legal name appears in the First Name, M.I., and Last Name fields.
   • The vendor's address, city, two-letter state abbreviation, and zip code are complete.
5. Click the Additional Info tab.
6. Enter the vendor's Tax ID number. If the vendor is a sole proprietor, enter the vendor's social security number. Otherwise, enter the vendor's nine-digit tax identification number.
7. Select the "Vendor eligible for 1099" checkbox.
8. Click OK to close the Vendor record.
9. Repeat steps 2-8 for each Vendor that needs a 1099.

Part 2 — Linking the Account to the 1099-MISC form:

1. From the Edit menu, choose Preferences, and then select Tax: 1099 from the list on the left.

2. On Company Preferences "Do you file 1099-MISC forms?" select Yes.
3. Select a 1099 Category (for example, Box 1: Rents).
4. Select the triangle in the Account column.
5. Choose one account (for example, Rent). (If you have multiple Rent accounts, choose "Selected accounts..." and choose the accounts [for example, Rent: Office and Rent: Warehouse]. Choose OK.)
6. Contact your accountant or the IRS to see if you need to change any amounts in the Threshold column.
7. As appropriate for your company, repeat steps 3 through 6 for each 1099 Category. Note that an account can be used once (for example, Rent cannot be linked to Box 1 and Box 2).
8. Choose OK to close Preferences.

Part 3 — Verifying 1099 Accounts and Amounts:

1. From the Reports menu, choose Vendors & Payables, and then select 1099 Summary.
2. Choose Print twice, so you can compare the printed report to reports on screen.
3. To verify your 1099 payees, on the report button bar,
   1. Choose "All Vendors" from the first drop-down list for 1099 Options.
   2. Compare the screen to the printed report.
   3. If a vendor listed on the screen should be reported on a 1099, follow Part 1, steps 1-9 to make the vendor eligible.
4. To verify your 1099 accounts, on the report button bar,
   1. Choose "All allowed accounts" from the second drop-down list for 1099 Options.
   2. Compare the screen to the printed report.
   3. If an amount listed in the Uncategorized column on the screen should be reported on a 1099, follow Part 2, steps 1-8 to link the account.
5. To verify your 1099 amounts, on the report button bar,
   1. Choose "Ignore thresholds" from the third drop-down list for 1099 Options.
   2. Compare the screen to the printed report.
   3. If 1099 amounts seem low (for example, in the "Box 1: Rents" column), go to the transactions and see if the correct Account was used for the vendor expense. Change the Account on the transaction if appropriate.

Generate the Payroll Summary report for the "Last Calendar Year."

Generating a Payroll Summary report: From the Reports menu, choose Employees & Payroll, and then select Payroll Summary. Change Dates on the report button bar to "Last Calendar Year." Compare each employee's accounts and amounts on the Payroll Summary report to the boxes and amounts on the employee's W-2. In the Jan - Dec 02 report column for an employee, QuickZoom on an amount to see the transaction details. Click X or press Escape to close the Transactions by Payroll Item report. Scroll to the right and last column on the Payroll Summary report. Compare the accounts and amounts in the TOTAL column to the boxes and amounts on the company's W-3. In the Jan - Dec 02 report column, QuickZoom on a TOTAL amount to see the transaction details. Click X or press Escape to close the Transactions by Payroll Item report.

Visit Tools and Resources at Payroll.com.