How to set up backup withholding for 1099 reporting for miscellaneous vendors in Microsoft Dynamics GP
This article describes how to set up backup withholding for 1099 reporting for miscellaneous vendors in a company in Microsoft Dynamics GP.
Applies to: Microsoft Dynamics GP
Original KB number: 930487
Set up the company
- On the Tools menu, point to Setup, point to Company, and then select Company.
- In the Company Setup window, select Options.
- In the Company Setup Options window, enter information in the following fields:
- Withholding Vendor ID
- Withholding File/Reconciliation Number
- Withholding Tax Rate
- Select OK.
Set up the vendors
Set up the vendors as 1099 vendors, and then specify the withholding options. To do it, follow these steps:
- On the Cards menu, point to Purchasing, and then select Vendors.
- In the Vendor Maintenance window, select a vendor in the Vendor ID list, and then select Withholding button.
- In the Vendor Withholding Options window, select the Subject To Withholding Deduction check box, and then enter the required withholding information for the tax rate, the tax type (such as Non-Resident Withholding), and the tax Start and End Dates. Consult your own local tax advisor to help you select the correct options.
- Select OK.
- Select Options button. In the Vendor Maintenance Options window, select Miscellaneous in the Tax Type field. Box 7 will default in for the 1099 Box, so change accordingly if needed.
- Select OK.
- In the Vendor Maintenance window, select Save.
Enter transactions and withholding amounts
- On the Transactions menu, point to Purchasing, and then select Transaction Entry.
- In the Set up for vendors area, select the vendor that you set up.
- When you receive the following message, select Yes:
"Is this document subject to withholding?"
- Enter the invoice amounts and the other required information.
The Subject to WIthholding checkbox is marked and the % has defaulted in, but it editable. (The distributions for the withholding taken will be on the payment, not the invoice.)
- If you choose a 1099 vendor, the 1099 Amount field is automatically populated with the transaction amount.
- Select Post.
Example: Let's say you have a $1,000 invoice with 20% withholding, so a net check of $800 was paid out. In the 1099 Details window, Box 7 will display $1,000 and $200 will show in Box 4 for Federal Tax Withheld. (To get the withholding in Box 16 for State Tax Withheld, you would have to manually edit the 1099 Details before printing.)
There's no functionality for 'State' requirements built into 1099 processing at this time.
Display the Withholding YTD column
On the Microsoft Dynamics GP menu, select Smartlist.
In the Smartlist window, expand Vendors, and then select 1099 Vendors.
If the Withholding YTD column isn't displayed, select Columns.
In the Change Column Display window, select Add.
In the Columns window, select Withholding YTD in the Available Columns list, and then select OK.
Select OK to close the Change Column Display window.
Now you can view the withholding year-to-date amounts of 1099 vendors in the Smartlist window.
View the withholding amounts
In the Vendor Credit Summary window, you can view the withholding amount for individual vendors by period. To do it, follow these steps:
On the Cards menu, point to Purchasing, and then select Summary.
In the Vendor Credit Summary window, select a 1099 vendor.
In the Vendor Period Summary window, select the year, and then specify the period.
The Withholding field displays the withholding amount. The 1099 Amount field displays the amount that was paid for the period. The sum of the withholding amount and of the 1099 amount is the same as the original invoice amount.
Print the Purchasing Analysis report
To see the 1099 amount by period and by vendor, print the Purchasing Analysis report. To do it, follow these steps:
- On the Reports menu, point to Purchasing, and then select Analysis.
- In the Purchasing Analysis Reports window, select Period in the Reports list, and then select Print.