Split tax forms
Splitting a 1099 tax form means that you distribute the amount initially reported on a single 1099 form across two 1099 forms. You can split a 1099 form after a change of ownership occurs during the tax year for the legal entity receiving the form. Splitting a 1099 form assigns a portion of the reported amount to the legal entity before the change and assigns the remaining amount to the legal entity after the change.
Changes to the legal entity of your connected accounts may include these examples:
- Change of ownership—The owner of the connected account sells the business to a new entity.
- Change of legal entity type—The owner of the connected account changes the business type from individual to company, and wants to file for both entities.
- Change of Tax Identification Number (TIN)—A sole proprietorship that uses the individual’s social security number (SSN) as the business TIN changes it to an employer identification number (EIN), and wants to file for both entities.
Changing the TIN doesn’t necessarily require a split (for example, if the change was due to an oversight). You’ll need to determine whether changing the TIN requires a split, an update, or a correction. Work with your tax advisor to ensure you understand the split requirements specific to your business.
Create a split
You can only split tax forms that have been filed and accepted by the IRS. To create a split, select the form in the Dashboard and then click Split from the menu on the detail pane. You can filter by the account ID to identify the form of the connected account you want to create a split for.
In the Split 1099 tax form, provide the date of the legal entity change and then click Split.
You’ll see two forms for the connected account:
- Form one includes the amounts from January 1 to the day before the specified split date.
- Form two includes the amounts from the specified split date to December 31.
If the legal entity is the same on both forms, they’re marked
Needs Attention. To correct this, you can update the form to replace the values for relevant payees.
You have to update the identity information on the forms (name, address, TIN) correctly, so that it isn’t the same as what it was before filing. You are responsible for marking the right identity information on each of the split forms.
After you update the form so that the payee information is different for each form, the form status changes to
Ready. Click File to send both forms to the IRS.
Split forms can only be delivered using postal mail. Paperless deliveries using the Express app is not currently supported.