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DualEntry tracks contractor and vendor payments throughout the year and compiles them into 1099 forms data at year end. This guide covers the three records you need to set up (vendor, account, and payment method), how the system accumulates 1099 amounts, and how to generate and file your forms. The 1099 report is cash basis, not accrual. This is the single most common source of confusion, so it’s worth stating up front: a bill is reported in the year it’s paid, not the year it’s billed or incurred. If you bill a contractor in December 2026 but don’t pay them until January 2027, that payment shows up on the 2027 1099, even though the expense hit your books in 2026. See How 1099 amounts are calculated below for a worked example.

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Records that drive 1099 reporting

Three records determine whether, and how, a payment shows up on your 1099 report. Get these right and the rest of the workflow (accumulation, review, filing) mostly takes care of itself.
  • Vendor: whether a vendor is 1099-eligible at all, plus the tax identity (TIN, tax classification, legal name) that gets printed on the form.
  • Account: which IRS form and box a payment falls into (for example, Nonemployee Compensation vs. Rents vs. Attorney Gross Proceeds), set via the 1099 Category on the GL account.
  • Payment Method: how the vendor was paid (ACH, check, credit card, and so on), which matters because some payment types are excluded from 1099 reporting by the IRS.
If a payment record has no payment method selected, DualEntry treats the transaction as reportable by default. Each record is covered in its own setup section below.

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How 1099 amounts are calculated

The IRS requires 1099s to be filed on a cash basis: the amount reported is what you actually paid a vendor during the calendar year, regardless of when the underlying bill was created. Example: John Doe Consulting is flagged 1099-eligible. Your Consulting Expense account is coded to NEC-Box 1; Office Supplies is not coded for 1099 at all.
  • 2026 Form 1099-NEC, Box 1: $12,800: $8,000 (Bill #1001, paid 2026) plus $4,800 (the Consulting portion of Bill #1002’s $6,000 payment made in 2026, calculated as 8,000/10,000 x 6,000). Office Supplies never counts; it isn’t coded to a 1099 category.
  • 2027 Form 1099-NEC, Box 1: $8,200: $3,200 (the Consulting portion of Bill #1002’s remaining $4,000 payment, made in 2027) plus $5,000 (Bill #1003, paid 2027).
Amounts accumulate from any record where money actually moves against a 1099-eligible vendor:
  • Vendor payments (pulls the paid ratio from the underlying bill)
  • Direct expenses
  • Vendor prepayment applications (pulls the ratio from bills and vendor credits)
  • Vendor refunds (pulls from the related vendor credit)
  • Journal entries that reference a vendor name
Voids and reversals are handled automatically. If you void a vendor payment after it’s already been counted toward a vendor’s year-to-date 1099 balance, DualEntry subtracts that amount without any manual adjustment.

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Setting up 1099 vendors

  1. On the vendor record, enable 1099 Eligible (is_1099_eligible). This defaults to off for every vendor, including vendors created through an integration sync, so contractors imported from a payroll or spend platform still need to be flagged manually.
  2. Enter the vendor’s TIN Type (EIN or SSN) and Tax ID, formatted accordingly (12-3456789 for an EIN, 123-45-6789 for an SSN).
  3. Select the vendor’s Tax Classification: Individual/Sole Proprietor, C Corporation, S Corporation, Partnership, Trust/Estate, or one of the LLC variants.
  4. Confirm the vendor’s legal name matches their W-9 exactly. A mismatch here is one of the most common causes of IRS rejection (“B-notices”) after filing.
Set up 1099 eligibility, TIN, and W-9 during vendor onboarding rather than waiting until year end. Request a completed W-9 before issuing the first payment and attach it to the vendor record. Retroactively tagging vendors at year end works, but you risk missing mid-year review opportunities and chasing an unresponsive vendor for their W-9.

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Setting up 1099 accounts

Assign a 1099 Category (category_1099) to any GL account that should feed the 1099 report, under General Ledger → Chart of Accounts, or by including category_1099 in the request body when you create or update an account through /public/v2/accounts/. This tells DualEntry which IRS form and box a payment coded to that account belongs in. Accounts left without a 1099 Category, such as Office Supplies, never contribute to the report, even for a 1099-eligible vendor.

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Setting up payment methods

Payment methods standardize how a payment was settled: check, ACH, wire, credit card, cash, or a third-party processor such as PayPal or Stripe. Set them up under Accounting Setup → Payment Methods. Beyond bookkeeping consistency, payment methods matter for 1099 compliance: payments made by credit card or a third-party network are typically excluded from 1099 reporting, because the processor already reports those amounts separately on Form 1099-K. Reporting the same payment on both a 1099-NEC/MISC and a 1099-K would double-report it to the IRS. Each payment method has the following fields: DualEntry preloads a default list: You can add your own payment methods, such as “Stripe” or “PayPal,” and set their Exclude from 1099 flag to match how that processor handles its own 1099-K reporting. Payment method is captured on vendor payments, direct expenses, vendor prepayments, vendor refunds, cash sales, customer payments, customer prepayments, and customer refunds, but only vendor payments and direct expenses currently feed the 1099 report.

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Generating and reviewing your 1099 report

The 1099 Taxable Report by Vendor (Reports → 1099 Vendor) groups payment totals by company and vendor, filtered by account 1099 category and vendor eligibility. Run it at year end, or periodically throughout the year to catch issues early, and review for:
  • Vendors approaching the IRS threshold: $600 for nonemployee compensation and most other categories, $10 for royalties.
  • Missing or incomplete TINs.
  • Legal name mismatches against W-9s on file.
Manual adjustments: if a payment was made outside DualEntry, or a 1099-eligible vendor was never added as a record, you can manually edit reported values or add a vendor and amount directly on the report. You are not limited to only what the system captured automatically. Once totals look correct, export in CSV or IRS FIRE format for filing.
If you void or reverse a payment after generating the 1099 report, re-run the report to ensure the totals are accurate. DualEntry does not automatically update a previously generated report.

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Filing deadlines

DualEntry generates the data for 1099 forms but does not file with the IRS on your behalf. You are responsible for submitting the forms through the IRS FIRE system, an authorized e-file provider, or by mailing paper copies. 1099 forms follow two federal deadlines each year:
  • 1099-NEC: recipient copies and IRS filing (paper or electronic) are due January 31.
  • 1099-MISC: IRS filing is due February 28 (paper) or March 31 (electronic).
If any of these dates fall on a weekend or federal holiday, the IRS moves the deadline to the next business day. For the current filing season (tax year 2026, filed in early 2027):
  • 1099-NEC recipient copies & IRS filing: February 1, 2027
  • 1099-MISC IRS paper filing: March 1, 2027
  • 1099-MISC IRS electronic filing: March 31, 2027
  • 1099-MISC recipient copies for Box 8 or 10 payments: February 17, 2027
Filing deadlines can shift slightly from year to year. Always confirm current dates on IRS.gov or with your tax advisor before filing. This page is for planning purposes only and is not a substitute for official IRS guidance. Build a review timeline that works backward from these deadlines. A common approach is to close your December AP by the second week of January, run the 1099 report, complete your review, and export by January 25. This gives you a buffer before the February 1, 2027 NEC deadline and leaves time to resolve any TIN or name issues.

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Tips and tricks: a pre-filing review walkthrough

Running the report once at year end and exporting isn’t enough to catch every issue. Most problems, like a missing TIN or a misconfigured account, are easier to fix in October than in the last week of January. Use this walkthrough:
  1. Run the 1099 Taxable Report by Vendor and filter to 1099-eligible vendors. Add every optional column (addresses, TIN, TIN type, tax classification) so you can review the full picture in one view. Look for the obvious gaps: blank or malformed TINs, missing addresses, no tax classification selected.
  2. Review your chart of accounts for correct 1099 Category coverage. Confirm every account that should feed 1099 reporting (Consulting, Legal, Rent, Royalties, and so on) actually has a 1099 Category assigned. Just as important, confirm nothing is miscoded (for example, Office Supplies accidentally mapped to NEC-Box 1). A single wrong mapping can silently overstate or understate every vendor that hits that account.
  3. Spot-check payment method on payments to 1099-eligible vendors, especially anything paid by credit card or a third-party processor. Confirm a payment method was actually selected (a blank field defaults to reportable) and that it’s flagged correctly under Exclude from 1099.
  4. Sort the taxable summary by amount and focus on vendors near the threshold ($600 for most categories, $10 for royalties). These are the vendors where a data issue actually changes whether a form needs to be filed at all, so they deserve the closest look.
  5. Compare this year’s eligible-vendor list against last year’s. A vendor who drops to zero activity, or a vendor who was 1099-eligible last year but isn’t flagged this year, is worth a second look. It could be a legitimate change, or it could be a flag that got reset, for example by a re-sync from an integration.
  6. For vendor payments posted through a journal entry rather than standard AP, confirm the vendor name field is populated. 1099 accumulation depends on it, and it’s easy to miss since it falls outside the normal bill-pay flow.
  7. Do this more than once a year. Running this checklist quarterly, rather than only in January, gives you time to chase down a missing W-9 or fix an account mapping before you’re racing the February filing deadline.
Last modified on August 27, 2026