1099

How to File 1099s Without the January Scramble

Earmark Team · February 2, 2026 ·

Alicia Katz Pollock, host of The Unofficial QuickBooks Accountants Podcast, just spent a week in what she calls “1099 Heaven,” teaching her comprehensive 1099 class and attending Nancy McClelland’s Ask a CPA workshop. She came away from that week ready to share a concentrated breakdown of everything accounting professionals need to know about 1099 filing.

“I’ve been watching the socials and people are asking, ‘Which report do I run so to filter out payments under $600 and payment processors?’ and, ‘How do I export to Excel?’” Alicia observes. “And the truth is, you don’t need to.”

QuickBooks Online has built-in tools that handle most of the filtering and analysis automatically. Yet every January, accounting forums light up with practitioners frantically exporting data to Excel, second-guessing payment methods, and chasing down W-9 forms as the deadline approaches.

In episode 125, Alicia breaks down what you actually need to know, including who qualifies for a 1099 (and why small errors won’t hurt you), which payment methods trigger reporting in our fintech-heavy world, and the QuickBooks tools that eliminate hours of manual work.

Understanding 1099 Compliance

Before diving into QuickBooks tricks and automation, you need to understand what these forms actually accomplish, and what’s changing in 2026.

Essentially, the 1099 system exists because the IRS wants to verify that contractors report their income. When you pay another business for services, you’re telling the IRS about that payment. They match your report against what the contractor claims on their taxes, making sure nobody’s working under the table.

“Literally millions of dollars, if not billions of dollars, is wasted in lost productivity while we chase down W-9 forms and file all these forms and do all of our research just to make sure that everybody is on the up and up,” Alicia says, not holding back her frustration. “So it’s kind of a vicious cycle.”

What’s New for 2026

This year brings a significant addition with Form 1099-DA for digital asset transactions. The IRS is finally tracking cryptocurrency sales and income, attempting to bring crypto economics into the traditional tax framework.

The $600 threshold that’s been in place for decades stays the same this year, but relief is coming. The One Big Beautiful Bill raises this to $2,000 starting in 2027. As Alicia notes, “The vast majority of my small businesses and micro businesses probably wouldn’t even qualify and won’t need to do this at all next year.”

Who Gets a 1099?

The rules are simpler than many make them:

Send 1099s to:

Self-employed individuals
LLCs filing as sole proprietors
Partnerships
Attorneys (even if incorporated)
Independent landlords (not property management companies)

Don’t send 1099s to:

S Corps
C Corps
Property management companies

Remember to check beyond your expense accounts. Balance sheet items like prepaid expenses, leasehold improvements, and due to/from accounts might contain qualifying payments. And if one company pays on behalf of another, the company that received the service files the 1099.

The Accuracy Question

Fear of making small mistakes keeps practitioners up at night unnecessarily.

“If your 1099 is off by $100 or $200, nobody’s going to come knocking on your door,” Alicia says reassuringly. “The IRS is short staffed. They’re really not looking for $600 in revenue. But if you’re talking hundreds of thousands of dollars, then it’s a bigger concern.”

The IRS primarily cares whether contractors report income lower than their total 1099s. If someone receives $200,000 in 1099s but reports $250,000 in income, no red flags appear. Problems only arise when reported income falls below documented payments.

Alicia shares a cautionary tale about a cleaning service client who paid cleaners as contractors for 15 years despite warnings. “Sure enough, she got audited after 15 years. And it turns out that the IRS agreed with me that they really are employees, so she now has some fines to pay.”

W-9 Best Practices

The key to avoiding January panic is to collect W-9s immediately when hiring someone. Don’t wait to see if they’ll hit the threshold; just send it. And don’t pay until you receive it back.

If contractors ignore your requests, you have leverage. Threaten to withhold 24% of their payment for backup withholding. “That warning is usually enough to get them to reply,” notes Alicia. If they still won’t cooperate, file the 1099 anyway with a blank EIN. “Unfortunately that might trigger an audit for them, but if they’re not sending you a W-9, well, what are they hiding?”

One persistent problem is W-9 forms often come back filled incorrectly, especially from LLCs. The form should show information for the entity actually paying taxes, not a pass-through or disregarded entity. Many people put their personal name on line one and business name on line two backwards, creating confusion about their tax status.

Navigating the Payment Method Maze

Much of the 1099 confusion stems from uncertainty about which payments count. With the explosion of fintech platforms, determining what triggers reporting has become increasingly complicated.

The Foundation Rule

You send 1099s for payments from your bank account, including:

Cash and checks
Online bill pay
ACH transfers
Wire transfers
Zelle

You don’t send them for credit or debit card payments. The merchant processors handle their own 1099-K forms.

The Fintech Gray Zone

PayPal, Venmo, and similar platforms create confusion. The determining factors are whether you use the business or personal version and whether you’re paying “friends and family” or for “goods and services.”

Alicia recommends asking two key questions:

Does it charge a transaction fee? If yes, you likely don’t need a 1099
Does it have its own bank balance? PayPal and Venmo do, so that’s another sign you’re off the hook.

Business versions of these platforms send their own 1099-K forms. However, merchant services use different thresholds: $20,000 and 200 transactions, maintained by the One Big Beautiful Bill. This creates a gap where payments between $600 and $20,000 via credit card aren’t reported by anyone, and that’s perfectly fine from a compliance standpoint.

For navigating the infinite fintech combinations, Alicia strongly recommends Jennifer Diamond’s 1099Problems website.

Material Reimbursements

How contractors invoice determines the treatment:

When materials are wrapped into the service invoice, you include everything.
When materials are itemized separately, you exclude materials and report services only.
When materials are invoiced separately, you ignore them entirely.

“The IRS knows you’re paying them the full price for the whole service, and it’s up to the contractor to do their own deductions for their own material costs,” Alicia explains.

The Reference Number Secret

Alicia shares a “hot tip” most practitioners don’t know. QuickBooks expense forms have a reference number field that automatically excludes transactions from 1099 processing.

“You would think the payment method would be the thing that allows you to do the exclusion, but no. It doesn’t work that way,” she notes. Instead, enter “debit,” “card,” “Visa,” “MC,” “Chase,” “Discover,” “PayPal,” or “Amex” in the ref number field. The wizard recognizes these and excludes the transactions—a feature carried over from QuickBooks Desktop.

Mastering QuickBooks Online’s 1099 Tools

Despite QBO’s built-in capabilities, Alicia observes practitioners still asking which report to run in order to filter out for the $600 and for the payment processors. The tools exist, but many don’t know where to find them.

The Contractors Center Hub

The Contractors Center, located under Expenses and Bills (and under Payroll, if enabled), manages 1099-eligible vendors from start to finish. Any vendor with “track 1099” checked appears here automatically.

The standout feature is self-onboarding. Invite vendors via email to complete a digital W-9 through their QuickBooks account or the free QuickBooks Money app. The system captures everything, including their name, address, tax ID, entity type, and qualification status.

“Tell them to look for it because it looks like spam,” Alicia warns. “It just says QuickBooks needs your W-9 and bank info and who is going to click that?”

Payment Processing Options

The Contractors Center offers multiple payment methods, including:

QBO Payroll subscribers: Contractors treated as employees at your per-employee rate
Contractor-specific plan: $10.50 monthly for up to 20 contractors, $1.70 each additional
QBO Bill Pay: Standard functionality

The 1099 Preparation Wizard

Access the wizard via “Prepare 1099” in the Contractors Center or the dedicated 1099 section under Expenses and Bills in the new navigation.

There are two approaches available: “Try Autofilled Forms,” which is an AI-powered automation, or “Prep My Own” for manual step-by-step control.

“I tried it this year and honestly they came up with the same information,” reports Alicia. Choose based on comfort level—automation for hands-off clients, manual for those wanting verification.

Custom Reports for Analysis

The wizard includes two reports: Accounts to Pay Vendors and Vendor Transactions. “I turn on the track 1099 status and then filter it so the status is on and the amount is greater than $600 instead of looking at the big list of all the payments for all the vendors,” Alicia says, explaining her workflow.

State Filing Complications

Some states participate in the Combined Federal and State Filing Program, and QBO handles both simultaneously. Others require separate filing through state websites.

Alicia’s particular frustration is that she’s located in Oregon. “it stinks for me because QuickBooks doesn’t export any kind of report that I can import into Oregon’s filing system. So I wind up having to type them all in by hand.”

Corrections After Filing

If you make an error, QBO allows corrections after IRS acceptance. Replace incorrect forms with $0, add forgotten contractors, or submit corrected amounts. Third-party platforms offer similar capabilities.

Your 1099 Action Plan

As Alicia emphasizes throughout the episode, the tools exist to make this process manageable. Stop exporting to Excel. Stop manually filtering. Use the automation that’s already there.

Looking ahead, the 2027 threshold increase to $2,000 will eliminate this requirement for many small businesses entirely. Until then, master these tools and workflows to transform 1099 season from a compliance nightmare into a streamlined process.

For an even deeper dive into 1099 filing, check out Alicia’s Payroll Perfection bundle, which includes QBO Payroll, QuickBooks Time, and payroll compliance training. And be sure to listen to the full episode for additional insights from Alicia’s week in “1099 Heaven.”

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!

From Data Entry Nightmare to Automated Workflow in One Demo Session

Earmark Team · February 2, 2026 ·

You’re ten days away from the 1099 and W-2 deadline, and you’re still wrestling with QuickBooks, fielding a flood of W-9 request emails, and dreading the inevitable data entry marathon. Sound familiar?

You’re not the only one. As David Leary admitted during a recent Earmark Expo webinar, “I’ve been procrastinating on issuing 1099s. It’s just not a great experience.” He described the dual frustration that many accountants know all too well. “It’s annoying work on both sides. I need to do my 1099s, but then, as a business that receives them, I get a slew of emails from other companies asking for a W-9.”

In the webinar, David and co-host Blake Oliver took TaxBandits for a test drive with Nikita Sullivent, the company’s Support Specialist, to explore how this IRS-authorized e-file platform handles over 70 tax forms. The live demo included the authentic technical hiccups we all face with real-world software and shared practical solutions for the compliance challenges that hit every January.

Getting your data in: from hours to minutes

Manual data entry for hundreds of 1099s is a bottleneck that keeps you from serving more clients. TaxBandits tackles this with multiple import options that meet you where your data lives.

The platform offers three main paths for getting data in. You can:

Enter forms manually one at a time (perfect for that forgotten contractor),
Use bulk upload templates for larger volumes, or
Connect directly with accounting software (current integrations include QuickBooks Online, Xero, Sage Intacct, and Zoho, with Karbon integration coming soon).

The bulk upload process stands out for its simplicity. As Nikita demonstrated, “You’re reviewing the columns at the top and inputting the data beneath them. Once we have all of that data input, we’ll just download it as a CSV and drag and drop it in.”

David particularly appreciated one detail. “I like how on your templates, in the header of each column, you give the instructions for the values you accept in that field.” No more guessing whether to use “CA” or “California,” or whether TINs need dashes.

The workflow breaks down like this:

Download the Excel template with clear column headers
Fill in your data following the built-in instructions for each field
Drag and drop the file into TaxBandits
Review the automatic error check that flags issues like missing digits in EINs or duplicate records
Fix any problems by either editing in the app or exporting just the error records for correction

For QuickBooks users wondering about the process, David confirmed you can export your vendor list, filter for 1099 vendors, and use the “upload your own file” feature. The first time requires mapping your fields to TaxBandits’ fields, but that mapping saves for future uploads.

One webinar attendee asked whether they needed to re-enter last year’s payees. “Absolutely not,” Nikita answered. “Everything stays in your account and rolls over year after year.” When you import this year’s data and the system finds a duplicate, you can either delete it or update the existing record with any changes.

The platform also distinguishes between importing only recipient data and importing both payer and recipient data. If you maintain TaxBandits throughout the year, importing just recipients during filing season works best since you’ve already set up your payers. But if you’re adding everything at once, the combined import saves steps.

With data flowing smoothly into the system, the next challenge is ensuring that data won’t bounce back from the IRS.

TIN verification: the new compliance reality

Getting data into the system efficiently matters only if it passes IRS validation. The agency’s transition from the FIRE system to IRIS (Information Returns Intake System) brings stricter requirements that every accountant needs to understand.

“The IRIS system is going to be far stricter on TIN matching than the FIRE system was,” Nikita warns. “Which means if the SSN, the EIN, the TIN, and the recipient name don’t identically match the IRS database, it’s going to kick the form back to you as accepted with errors, and you have to file a correction.”

The keyword is “identically.” A contractor who goes by “Mike” but whose Social Security card reads “Michael” could trigger a rejection. Even punctuation differences in business names can cause problems.

TaxBandits builds TIN verification into multiple touchpoints:

When collecting W-9s throughout the year
When adding recipients to your address book
During the 1099 workflow as a final check

The smart approach starts early. “When you get a W-9, when you get a new employee or contractor, you go ahead and do the TIN matching on that prior to the filing season,” Nikita advised. This prevents last-minute surprises when deadlines loom.

Verification typically returns within two to four hours during normal periods. But during peak season “it can be up to 24 hours,” Nikita warned. If you’re verifying TINs within the 1099 workflow itself, the system waits for results before transmitting, which is potentially problematic if you’re filing on January 31st.

For those worried about the cost of corrections, TaxBandits offers some protection. Their “TaxBandits Commitment” covers correction filings at no additional charge. But even free corrections cost you time and stress.

The platform also streamlines W-9 collection. Instead of chasing paperwork, you can send electronic W-9 requests. Recipients complete them online, and the data flows directly into your TaxBandits account, ready for immediate TIN verification if desired.

Once your forms are prepared and verified, you still need to get them into recipients’ hands compliantly.

Distribution flexibility that actually works

The old choice between hours at the post office or forcing everyone into electronic delivery is over. Modern distribution needs flexibility, and TaxBandits delivers exactly that.

“Everything is very customizable to your needs,” Nikita explained when asked about mixing delivery methods. “You can choose some postal mail, some online access, and some want both.”

The three distribution paths each serve different needs:

USPS postal mailing handled entirely by TaxBandits
Electronic recipient portal requiring just an email address
Both options for recipients who want backup

The electronic portal solves a critical compliance issue. The IRS requires formal consent for electronic delivery, so you can’t just email a PDF. TaxBandits automates this. Recipients receive a secure link, enter a PIN for verification, and provide documented consent.

If someone ignores that email, the system tracks everything. You can see who consented, who declined, and who never responded and then handle postal delivery for the holdouts.

For returning recipients, the portal builds value over time. “If you file for that same recipient next year, they’ll use the same link, and they’ll access all of the documents from the same portal,” Nikita noted. Recipients get their own organized tax document archive without any extra work from you.

State filing adds another compliance layer, but TaxBandits simplifies this, too. The platform tells you exactly what each state requires:

States requiring direct filing (you handle separately)
Combined Federal/State Filing participants (automatic forwarding)
States requiring no 1099 filing

Throughout the process, you get real-time status updates so you can see which forms were transmitted to, received by, and accepted by the agency. For postal mail, statuses are submitted to USPS and en route to the recipient. When a client claims they never received their form, you have documentation. After transmission, watermarks disappear from your copies, and you can reprint professional versions anytime.

For firms with multiple preparers, the platform offers even more control through team management features.

Scaling with teams and support

Larger firms need more than just bulk upload; they need workflow management. TaxBandits’ team management features let you maintain control while delegating the actual work.

The system offers three permission levels:

No roles: Any team member can prepare, approve, and transmit
Two roles: Preparers create forms, approvers review and transmit
Three roles: Preparers create, approvers review, transmitters handle payment and filing

You can also create location-based groups. Nikita shared an example. “Say you have a group in Indiana and a group in Tennessee. Anytime you add a new payer and assign them to the Tennessee group, then all of the team members included in the Tennessee group have access to that payer.”

Support is critical when things get complex. During busy season, TaxBandits extends hours to 8 a.m. to 8 p.m. Eastern. They offer phone, email, and chat support, plus an AI assistant that pulls from both their knowledge base and IRS guidelines.

The platform’s YouTube channel provides step-by-step videos for specific workflows. For Sage Intacct users who asked about integration, Nikita recommended checking their channel for detailed walkthroughs showing the complete process from Sage to TaxBandits.

Pricing works on a credits system with bulk discounts. Buy more credits upfront, pay less per form—and credits never expire. As Nikita confirmed when asked about rollover, “Your credits will never expire. So if you want to purchase for the next five years now and get the best price we can give you, go for it.”

Making next year easier starts now

The strategies demonstrated in this webinar show a fundamentally different approach to information returns. TaxBandits treats compliance as a year-round process rather than a January panic.

The IRS’s push toward e-filing mandates and stricter validation isn’t slowing down. The IRIS system is just the beginning of modernization efforts that will continue tightening requirements. But the webinar demonstrated real workflows you can adopt immediately, from template imports to electronic W-9 collection to role-based team permissions.

Ready to transform your 1099 and W-2 workflow? Watch the full Earmark Expo webinar to see TaxBandits in action, including the complete demo of bulk uploads, error checking, and team management features. The platform offers over 70 tax forms beyond just 1099s and W-2s, making it a comprehensive solution for year-round compliance needs.

Tired of the January Scramble? Discover a Proactive Approach to 1099 Compliance

Earmark Team · February 7, 2025 ·

No one brushes their teeth only the day before a dentist appointment and expects a clean bill of health—yet many businesses approach 1099 compliance in exactly this way. Every January, they scramble to collect W-9s, validate tax IDs, and rush out filings before the deadline. This last-minute frenzy creates stress and exposes companies to serious penalties if documentation is missing or incorrect.

In a recent Earmark Expo webinar, Gordon Walsh from Avalara demonstrated how modern automation tools like Avalara 1099 & W-9 can transform 1099 compliance from a reactive, annual challenge into a proactive, year-round process. By embracing real-time TIN matching and automated W-9 collection, businesses can significantly reduce compliance risks while freeing up valuable time during the year’s busiest season.

1099 Compliance Shouldn’t Be an Annual Fire Drill

Federal law requires businesses to collect W-9s before making payments to vendors. Despite this requirement, many firms still rely on manual processes: chasing vendors for handwritten forms, deciphering errors, and hoping everything arrives before January 31st. Without valid taxpayer information, businesses must withhold 24% for backup taxes—a situation that can create significant cash flow issues for vendors and administrative headaches for businesses.

“January’s 1099 season is really just where we feel the pain of all the things that we’ve done year-round that maybe didn’t get done,” explains Gordon Walsh. This reactive approach inevitably leads to costly, last-minute fixes and potential penalties.

The Power of Automated W-9 Collection

Traditional W-9 collection relies heavily on email and PDF exchanges—a system Gordon critiques saying, “There’s no other place in my life and business anywhere where I’m giving handwritten documents to people and expecting to do business with them.”

Modern automation tools solve these challenges through:

Guided electronic forms with built-in validation
Intuitive menus that reduce classification errors
Centralized dashboard for tracking compliance status
Automated classification checks for 1099 requirements
Electronic delivery consent during onboarding

Having a system to collect vendor information ensures the capture of correct legal entity names, preventing downstream mismatches with IRS records.

Real-Time Validation: Preventing Costly Mistakes

Real-time TIN matching serves as the cornerstone of modern compliance systems. Instead of discovering mismatches after filing or receiving notices months later, Avalara’s system validates tax identification numbers during vendor onboarding.

When mismatches occur, vendors can correct issues immediately, preventing:

Notices from the IRS
Mandatory 24% backup withholding
Time-consuming vendor follow-up
Potential penalties and fines

The system returns validation results directly to vendors during the submission process, allowing for immediate corrections. This preventative approach significantly reduces the risk of receiving IRS notices demanding backup withholding or corrections.

Streamlined Year-End Processing

The platform’s dashboard provides clear visibility into compliance status using a stoplight system:

Green: Ready for e-filing and electronic delivery
Yellow: E-filing ready but requires physical mail delivery
Red: Issues requiring immediate attention

For corrections, which are provided at no additional cost, the process has been simplified to a few clicks. Users can edit information directly in the system, with automatic filing of corrected forms to both state and federal authorities.

Integration and Accessibility

The system integrates with major accounting platforms like QuickBooks and includes bulk import capabilities for larger datasets. A global search function enables quick access to historical forms, allowing users to resend documents to recipients within seconds rather than searching through saved PDFs.

Historical data is maintained for five years, and the platform includes:

Secure document-sharing capabilities
State-specific compliance automation
Address verification through USPS
Multiple user access with role-based permissions

Pricing and Implementation

Rather than charging by the number of clients or users, pricing is based on total form volume. This tiered pricing model creates economies of scale—from several dollars per form at lower volumes to cents per form for high-volume users. While physical mailing incurs additional costs, the system encourages electronic delivery through early consent collection, helping businesses reduce expenses and administrative overhead.

The platform’s ease of use has earned it an NPS score of 79, reflecting its intuitive design and comprehensive feature set. With continued development, including a recently tripled development team, the system aims to expand its integration capabilities and streamline data flow between various business systems.

Through this combination of preventative validation, automated collection, and streamlined processing, businesses can transform their 1099 compliance from an annual emergency into a manageable, year-round process.

Watch the full Earmark Expo webinar to see these automation tools in action and learn how to implement a proactive approach to compliance.