Jaclyn Anku, ProAdvisor Training & Certification Leader: Hey, I'm Jaclyn, and welcome to In The Know. This is our weekly video show designed to keep you up to date on the most exciting innovations across the QuickBooks Online ecosystem.

Today, we're talking about updates to making 1099 corrections to QuickBooks Online. Correcting 1099 forms directly from QuickBooks Online was a top-requested feature from you, accountants. And this year, as per IRS regulations, you have to file corrections the same way the original forms were filed. This means that all 1099 forms that are e-filed must also be corrected with e-filing. Our team has been hard at work, and now all 1099 forms accepted by the IRS can be corrected right in QuickBooks Online, free of charge.

And now for the Fast Facts: 

• This update is applicable to all U.S. QuickBooks Online Payroll and Contractor payments users. 
• Go to the 1099 filings using the taxes tab to access it. 
• This has been available to all users within the United States since February 14. 

If you find this update interesting or helpful, go ahead and like, comment and subscribe to the QuickBooks YouTube channel for more.

Jaclyn: Let me go ahead and introduce you to Tiffany Dolan, who is the talented product manager behind the 1099 feature in QuickBooks Online Payroll.  

Tiffany Dolan: Hi Jaclyn, thank you so much for having me. I'm Tiffany and I've worked on QuickBooks products for the past seven years. I’m excited to share about 1099 corrections. So, as you know, 1099s that you have e-filed with QuickBooks can be found under this taxes section under the 1099 filings section. If you still haven't filed your 1099s, you can still do so all the way until May, by going to payroll, then contractors, and clicking on that prepare 1099 button.

But let's assume you've already filed your 1099s by the IRS deadline of January 31. We're going to kick it off by correcting a 1099 for Bruce Wayne. So if your 1099 form has been accepted, you will see that one of the potential actions that you can take is to correct it, starting with this link right here. If the 1099 has not yet been accepted, it's been rejected, or is still being reviewed by the IRS, you won't be able to start your correction process. The IRS only accepts 1099 corrections that have been previously accepted.

Let's move on to correcting this 1099 for Bruce Wayne. The first thing that you will see is this: a notification that the business information must be the same as when you originally filed. And that means for you—as the person who is sending and preparing the 1099—the business information must be the same. If you change it in QuickBooks, for instance, by going to your account in settings and the new form, the corrected form has different information than the original form. The IRS won't be able to match them, and they might reject your correction, which is a problem. If you absolutely need to change the business information, you can do so. But the IRS requests that a written letter be sent to them, which is why you have to do it outside of QuickBooks. All the instructions are right here on that link. Learn how to correct 1099. 

But let's assume that the company information has not changed since the 1099 was originally e-filed and you're good to go. So you're going to click. Sounds good here. I'm going to walk you through two scenarios for Bruce Wayne. The first one is that the total amount for Bruce Wayne was not the right one. So there are two general reasons for this. The first one might be that you may have not selected all of your the right accounts in your chart of accounts, or you have not mapped them to the right box. You can make those changes right here if needed.

Another common scenario, which I'm going to click next, would be that, for instance, you didn't record all of your expenses in QuickBooks before filing your 1099. You realize you now need to add some more money, to what I declared on Bruce Wayne. You can go into QuickBooks and adjust your expenses right in QuickBooks, and then you can go and finish correcting your form.

So in this scenario that I'm taking here, you can see that my original total was $13,000, and that the corrected total is $13,750. I created a new expense for Bruce Wayne for 2023, and QuickBooks is automatically pulling that new corrected total right here, which is really great. So in that scenario you would be seeing your previous total and your your corrected total. Click next, and you can see the form is going to appear here. You can preview it if you want to double check that everything looks good.

Please note that you will see that there is this little corrected checkbox that appears which is normal, which is actually a good sign. And then once you're happy, and everything looks really good, you can click on e-file to see your corrected form, which I'm not going to do right now because I want to walk you through the other scenario. 1099 corrections are free, so you can make as many corrections as you need for anyone without fear of having to pay more.

All right. I'm going to go back because I want to talk about another use case. This scenario is if you filed for a contractor by mistake. For instance, Bruce Wayne didn't actually need a 1099 for a variety of reasons. [For example,] they incorporated. There could be a variety of reasons why Bruce Wayne might not need a 1099 anymore, but a 1099 was filed by mistake. In this scenario, what you would do here is you would remove the mappings right here. So you have the information on what to do here. If you found a contractor by mistake, remove the accounts and head to the next step.

Now, I'm going to do just that. You click here on the garbage [icon] to remove all your accounts, and then you can click next. It might affect other 1099s meaning that if you filed for Bruce Wayne by mistake, you may have filed for other people by mistake. But let's assume that's not the case for this scenario. 

Here, you can see something that is completely different. So, the previous total is still $13,000. But the new corrected total is, as you can see, zero, which is normal because that's what the IRS wants. If you filed for someone by mistake, what they want is a form that is pretty much like a voided form with a bunch of zeros in it, which is why it says that the corrected total is zero for Bruce Wayne. 

Next, I'm going to show you what that form looks like. In this scenario, you know, Bruce Wayne, as you know, has zero. If you click on preview here, you will see that they do have that little corrected checkbox here, and a bunch of zeros in all of their boxes in the 1099, which is just what we're looking for here. So I'm going to go ahead and click e-file and we're done. And that is pretty much it for the 1099 correction demo.

Jaclyn: Tiffany, thank you so much for being with us here today and for all of the incredible work that you and your team have done on 1099s. 

Next, I'm joined today by QuickBooks ProAdvisors Dan Luthi and Nayo Carter-Gray. Dan, and Nayo, thank you so much for being with us today to talk about corrections to 1099s in QuickBooks Online Payroll. 

Nayo: Thank you for having us.

Dan: Absolutely. Thank you.

Jaclyn: Nayo, let me start with you. Tell me what it means to you as a firm owner and team leader that 1099 corrections can be made from right within QuickBooks Online.

Nayo Carter-Gray Oh my gosh. Let me tell you how amazing this is. So 1099 the process itself has always felt like one of those things we've just rushed through, and there's always a mistake that happens. And then trying to correct those mistakes sometimes can be a pain in the you-know-what. To hear now that we can make those corrections where we're actually processing the forms is like a mini celebration, because it just keeps us from having to go into another app to do a correction, or to try to figure out who the heck is doing corrections in the first place. I'm excited about this because, yeah, we always have a few corrections that need to be made. I'm not even gonna lie. It's just not a 100% foolproof process. So I'm excited.

Dan Luthi: I'll add to it. I mean, the part that's exciting to me is that now the system is all together in one. And much like Nayo mentioned before, historically, you would have it entered through QuickBooks Online, and then you would have to go do a correction through another system. Now, with all the requirements of [1099s] being electronically filed and the expectations they're putting it all together in one space does cut down on a huge amount of time and allows you to see what's happened with it and why there was an adjustment made and things like that. So that's huge, huge time savings. But also, transparency is critical. [It’s] really great to have it.

Jaclyn: Dan when you say transparency, is that amongst your team, or between your team and your clients? 

Dan: It's both, to be honest with you. You know, we have a team of about 30 employees. When we were working on your clients, you're kind of all over the place getting things done, especially during that first month of the year. And so having that ability for someone to go in and look at that—what happened with that client or not—and being able to then communicate it without having to go through a manager or someone else who, you know, potentially processed or finalized, it just cuts down on a huge amount of time.

Dan: And also for the client, it just allows you to, again, to be able to show not necessarily just proof of work, but just clarity in what was done and why. Whether it's a change in a number or an amount that was paid, or whether it's a change in, you know, it was an SSN before, and now the vendor changed to an EIN, they can see all of that context at their fingertips. It stays intact with the file moving forward, which is really important. 

Nayo: And they'll know where to get the corrected form if they need it. It's all in one place because that's the other piece. You make a correction. Now we have to figure out how to get it to you for now using the client portal. But this just simplifies that process because it's all in one place.

Dan:  100%.

Jaclyn: Nayo how does having everything all in one place help with your client communication? 

Nayo:  It streamlines it. We have all been overwhelmed by technology and apps, so anytime I can minimize a click for a client, I'm all about it. You know, they recognize the QuickBooks app, they log in there to do things. If I can just say go to the left menu item, click this, click that, and it's all there, they're happy campers because I'm not sending them an email about it. I'm not telling them they gotta go here. They gotta go look there. They know, hey, it's going to be in QuickBooks. I can just go in there while I'm in there, send it off an invoice and pull those forms at the same time.

Dan: Yeah, our clients are very familiar with the QuickBooks Ecosystem, like just the ecosystem as a whole. Being able to go in there and process payroll or, you know, submit payments or whatever it is, they don't have to learn something new, which I think is the biggest benefit for them, because we change things all the time. Right? Like on the back end when we're working with our clients, like we're switching out, you know, this system for reporting or this system for quality control or whatever it is. They don't care. They don't want to have to worry about any of that stuff. They don't have to worry now about a 1099 system. They already have the sign-in information memorized; it's already set up. They already know how to move around it. It really just makes their lives a whole lot easier to have it in one place.

Jaclyn: We're coming out of 1099 season now. Nayo, as you look ahead to next year's 1099 season, is there anything that you would do the same or differently? 

Nayo: One thing we have added to our end of month process is to start looking for those vendors before the end of the year. If we're noticing that our clients are paying people with things like Zelle or pulling money out of the bank, we're asking way more questions like, hey, what are you doing with these funds? Is this someone you're paying for a service? We need to issue them a W-9 before it's time to track them down for the 1099. We're just being a whole lot more proactive. We really started that last year, but now we're kind of dialing it in honing it in a little bit more, because now we're really kind of fine-tuning it for each of our clients, because we know their habits a little bit better now that we're kind of watching them with, you know, with that magnifying glass.

Dan: Oh and we're giving our clients kind of one of two options with it this year. Whereas in the past it was kind of a free-for-all or kind of do whatever you want type solution. For us, we're following up once you hit a $600 threshold—if they would like to fall under that bracket. If they want a more refined bill payment system, we'll actually set up a process where we don't pay vendors unless we have specific documentation from them. Depending on how the client is depending on their payments, their security levels or things like that, we're pushing heavily for one of those two options, just to make sure that things are more fluid and more accurate going forward. It seems to make it so there's not as big a rush at the end of the year, which I think is something that's super critical.

Nayo: And Dan, his team is so great at spend management. Like I learn a lot from Dan all the time about how we can modify and change and refine this process. So, you know, you learn from THE guy here with this process. I'm just thankful that I'm in your circle, Dan. Thanks for allowing me to be.

Dan: Thank you. I'm grateful in your circle, too.

Jaclyn: Dan, Nayo, thank you so much for being here today and for sharing all of these rich insights and stories.

Nayo: Thanks for having us.

Jaclyn: Bye, thank you.

And thank you for watching. To stay In The Know, like, comment, and subscribe to the QuickBooks YouTube channel so that you don't miss a single episode. We'll catch you next time.

Meet the ProAdvisors

ProAdvisor Nayo Carter-Gray: Founder, 1st Step Accounting 

ProAdvisor Dan Luthi: COO, Ignite Spot