Understanding 1099 Statuses

Understanding the key statuses, eligibility requirements, and action criteria for 1099 processing in Wingspan.

1. Status Descriptions:

PendingThe 1099 amount & status has not been calculated yet.
Needs ActionAction is required by the payer due to missing or mismatched criteria. The 1099 form moves to this status if any of the "Needs Action Criteria" is not met.
ReadyThe 1099 form is ready for submission, having met all "Eligibility Criteria".
SubmittedThe 1099 form has been sent to the IRS but hasn’t been accepted yet.
AcceptedThe IRS has confirmed receipt and acceptance of the 1099 form or its correction.
RejectedThe IRS has rejected the 1099 submission.
ExcludedThe tax form won't be filed due to reasons specified in the "Eligibility Criteria"

2. Eligibility Criteria:

  • Minimum Amount: The recipient should have received at least $600 from a single payer during the tax year.
  • Eligible Tax Classification: Payments to C Corps, S Corps, and LLCs that are taxed as corporations do not require a 1099-NEC form. The exception is for legal services, which you will need to handle manually.
  • U.S. Business or Individual: Recipient should be a U.S. citizen or resident alien or a domestic business entity, including partnerships and LLCs. Non-U.S. entities aren't eligible and may need different tax forms.

3. Needs Action Criteria:

  • Mandatory Information:

    • Recipient Address: Where the 1099 should be sent.
    • Recipient TIN (Tax Identification Number): Can either be an SSN (Social Security Number) or an EIN (Employer Identification Number).
    • Recipient Name: Must be the legal business name for companies or the legal first and last name for individuals.
  • Recommended Criteria:

    • Matched TIN: The TIN should be confirmed by the IRS to match the given name. It should not be pending or mismatched. You should re-enter a correct TIN and name.
    • Federal Tax Classification: The tax status of the recipient. If no tax classification is provided, we default to Sole Prop.

4. Status Workflow:

  • A 1099 form starts in the Pending status.
  • After calculations, if the form meets all "Eligibility Criteria", it progresses to the Ready status. If not, it moves to Excluded.
  • If any "Needs Action Criteria" is missing, it will be marked Needs Action.
  • If all criteria is fulfilled, it returns to Ready.
  • The form can then be Submitted to the IRS.
  • The IRS will either Accept or Reject the form.
    • If accepted, the process ends.
    • If rejected, it reverts to Needs Action for corrections.

Eligible individuals include U.S. citizens, resident aliens with a substantial presence, or those with a Green Card. Non-U.S. entities aren't eligible and may require other forms which are not supported by Wingspan