Attorney's fee retainer and 1099s

2021 Accounts Payable Year-end Checklist

Troubleshoot attorney fee retainer that was changed later to non-employee. Both attorney fee retainer and nonemployee will place the amount in the Non-employee Compensation box. To review the attorney settings, use Modify Existing Vendors. Selecting attorney fees settlement when you are ordered by the court to pay the attorney fees on a settlement. The amount for the attorney fee settlement will be placed in box 10, Gross Proceeds Paid to an Attorney on the 1099-MISC form.

However, if you are paying for your normal monthly retainer fees, then you should choose attorneys fees retainer. The amount for the retainer will be placed in box 1, Nonemployee Compensation on the 1099-NEC form. In most cases, organizations will choose attorneys fees retainer as the 1099 type for an attorney.

Where can I learn more? Refer to General Instructions for Form 1099 at irs.gov.

Videos

Changing the 1099 type on an invoice

When the 1099 type on an invoice is set to nonemployee compensation instead of attorney fees retainer, use the Adjust 1099 Balances routine to update the 1099 type.

Do this...

1. Open Connect Accounts Payable > Vendors > Adjust 1099 Balances.

2. Use the Year box to select the tax year.

Year box

3. Use the Vendor box to enter the vendor name or number, and then press Enter.

Vendor box

The invoices for the selected vendor will be displayed. You can see the 1099 Type column does not show attorneys fees retainer as the 1099 type.

Invoices grid

4. Use the Set As box to select Attorneys Fees Retainer.

Set As box

5. Click Set All .

Connect sets all checkboxes in the 1099 Type column to selected.

1099 Type column updated to show Attorneys Fees Retainer

6. Click GO (CTRL+G).

Connect changes the 1099 Type to Attorneys Fees Retainer on all of the invoices for the selected vendor. To verify the adjusted 1099 type, print the 1099 Reconciliation Report for the selected vendor. All of the 1099 amounts for the selected vendor should be assigned to the Attorneys Fees Retainer 1099 type.

202011, 2020Dec15