Please note, Trolley does not offer this guide as tax advice. It is meant to inform Trolley customers how to use the Trolley Tax Center. We recommend that you seek advice from a tax professional to ensure you meet the appropriate tax reporting obligations for your business.
Here is a quick step-by-step guide of the key tasks that we will help you complete with the Trolley's Tax Center as part of your year-end reporting for the IRS:
Add Offline Payments (for any additional tax-reportable payments sent outside the Trolley platform)
Enter your company’s tax information in the Business Tax Profile
Check that W-9, W-8 Series and other tax forms have been collected and reviewed
Review and approve Recipient earnings
Send tax statements to Recipients (1099-NEC, 1099-MISC, 1042-S)
E-File to the IRS (1099-NEC, 1099-MISC, 1042-S)
Your year-end tax reporting can be found in your Trolley account in the Tax Center, which is accessible via the Tax Center tab on the main left menu.
Your End of Year tax reporting for each tax year can be found at the top of the Tax Center main page. Select the 2021 Tax Year and then the blue button ‘Navigate to the EOY Review & Filing Tab’ to get started.
EOY Tax Review & Filling
Our year-end tax product has been laid out with horizontal tabs to organize your work into logical sections. In addition, you will see the main due dates on each tab to remind you when specific tasks should be completed. In this guide, we will explain each step. We have also shared additional guide notes within the Tax Center to help you through the filing process.
The below Tabs are your primary navigation through the EOY tax reporting process. Additional indicators will appear on each tab to show you helpful information quickly, such as the status of a tab (ex., completed or incomplete).
If some form types don’t apply to your business, such as if you do not need to send any 1042-S statement to non-US recipients, you won't see those tabs in your Dashboard.
1. Add Offline Payments
Make sure all your payment data has been added
At this step, one of the first things to do is to ensure that you have all the reportable earnings data in the Trolley system for the tax year. If you sent any tax-reportable payments outside of Trolley, you’ll want to import or add those payments as Offline Payments data.
Navigate to Payments > Offline Payments to get started.
Upload Offline Payments
Offline Payments are those that are not processed on the Trolley platform.
Suppose you processed payments to recipients during the tax year through a different payment provider (such as your bank, checks, or another payment platform). In that case, you can include those payments in your EOY Statements in Trolley using the Offline Payments Upload.
(Please remember that, unless stated in your PayPal contract, PayPal will issue 1099-Ks to your recipients who earn over $600 in a calendar year. In most cases, PayPal’s obligation to issue a 1099-K does not replace your company’s obligation to report those earnings to the IRS. If you’re unsure, you should consult a tax advisor. In some limited circumstances, PayPal may generate a Form 1099-K statement for PayPal account holders and report payments for some recipients directly to the IRS, such as if the PayPal account holder is a US Person AND received more than USD 20,000 AND more than 200 PayPal payments within a tax year)
We have provided a sample and template file you can download and use. Just click on the “Upload Offline Payments” button, then you will have a link to “Download Offline Payment CSV Template” to find the template and sample file.
You can also add offline payment data manually, one at a time, via the “Payments” tab on a Recipient’s Profile below the Payments table.
Once updated, select the ‘Add Offline Payment’ button at the bottom of the form.
Important information about Offline Payments:
The ‘Taxable’ (i.e. Tax Reportable) box must be selected/checked for the earnings to be reported on the end-of-year statement. If they are not marked as Taxable, they will not be included in EOY tax reporting.
You can enter Earnings and Withholding amounts in any currency. We will automatically convert the amount to USD at the mid-market exchange rate (as provided by Open Exchange Rates) as of the ‘Processed On’ date you provided.
Payout Reason determines the income code taxable payments will be reported under.
The Memo and External ID fields can be used for your own reference.
You can provide the Payout Method (for example, Bank Transfer, PayPal, etc.) This is useful if you use our Widget or Portal and have enabled Display Offline Payments in the Recent Payments history for the recipient to see those payments. This is an optional setting under Settings > White Label > Widget & Portal > Display Offline Payment History. If you have this setting enabled, recipients will be able to see this Offline Payment data. Disable this setting if you don’t wish to display Offline Payment data to recipients.
We have an API endpoint to automate the process of sending us Offline Payment data throughout the year (e.g. when the payment is sent outside of Trolley, you can automatically pass that offline payment data to us via API).
2. Business Tax Profile
Before you do anything, please provide your company’s tax info on the Business Tax Profile page. This info will be added to the 1099-MISC, 1099-NEC and 1042-S forms and the E-Files. This includes the company's legal name, registered business address, EIN, Chapter 3 and Chapter 4 codes, etc.
You will be asked to provide up-to-date Business tax info each tax year. If you have used Trolley's EOY tax reporting software for the previous tax year, you will be able to save some time and copy all this info from the previous year by clicking on the ‘Copy over last year’s business tax profile?’ link at the top of the form.
Please review the data to ensure it is still correct and update it as necessary.
3. Check W-9, W-8 Series and other tax forms are collected and reviewed
Ensure all recipients paid in the previous tax year (1st January to 31st December) that earned more than USD 600 for Independent Personal Services or more than USD 10 for Royalties have completed a valid (i.e. in ‘Reviewed’ status) tax form (W-9, W-8BEN, W-8BEN-E, etc.) Review and approve any un-reviewed forms (i.e. those in ‘Submitted’ status). If the forms submitted are incorrect, you should ‘Void’ the form and request the user to submit a new tax form with corrected information.
When a tax form (W9 or W8) is in “Reviewed” status, the first circle in the “Progress” column will be a green checkmark.
This page displays earnings for all of your Trolley recipients. By default, we filter the list of recipients to show only the recipients that need a 1099-MISC or 1042-S, using the filter flag "Requires Statement Delivery." We determine this by looking at these conditions:
Using the Royalties payments threshold (More than USD$10 paid in the tax year) for royalties income type;
Using the Independent Personal Services threshold (More than USD$600 paid in the tax year) for Independent Personal Services income type;
Excluding C-Corporations, S-Corporations, and LLCs that elect treatment as an S-Corporation or C-Corporation, as these do not need to be sent a 1099-MISC;
Includes ALL recipients that have ANY withholding (even just $0.01). This includes corporations that meet the previous criteria.
Tax Form Warnings
On the Tax Centre's home page, you can also review some warnings for the W-9 and W-8 forms submitted. These can be found on the red warning icon on the right of the table. Standard warnings will include:
The Address information provided on the form looks invalid.
The recipient’s country does not match the country provided on the form.
The Foreign TIN provided on the form looks invalid.
These warnings help you identify potential issues with tax forms so you can look further into those forms to ensure they are valid.
Data Capture of uploaded tax forms
If a recipient’s tax form was uploaded (e.g. a PDF or JPEG), you can edit data that was typed in if it doesn’t match the uploaded form. You can do this by ‘Editing’ the recipient’s uploaded tax form on their recipient profile or in the Tax Center.
You will be asked to provide the date of signature of the form (when the recipient signed it). For W8s, this date will be used to notify you/the recipient when it expires, as W-8 forms expire after three years.
Resolve any TIN Matching flags
Trolley will perform TIN Matching with the IRS to check the provided US TINs (SSNs/EINs) and that the individual or business’s name is accurate with the IRS records. If they do not match, we will display the TIN as “Not Valid.”
If you’re using our “TIN Validation Failed” white label emails, the recipient will receive an automated email when TIN the result is “Not Valid.”
If the recipient doesn’t take action on their own, you should consider voiding the Tax Form they completed and ask the recipient to complete a new tax form to correct their TIN (or name). Usually, the TIN or the name is not accurate.
Note: It is possible to send an EoY Statement to a recipient who has provided an invalid TIN. This will likely result in you receiving a B Notice from the IRS later in the year.
For Foreign TINs on W-8 Forms, we perform validation checks for countries that have published rules for TIN formatting in their country. This covers 100+ countries and includes business or individual entities, the TIN length (a minimum and a maximum number of characters), checksums, and other formatting rules. If the Foreign TIN does not meet the published validation rules, we will warn you that it may be invalid. You can then review and Void the tax form (W-8) if you believe it needs to be corrected.
4. Review and Approve Recipient Earnings
The next step is to confirm that the earnings and withholding for each recipient are accurate and “approve” each recipient’s earnings. By approving earnings, the EOY Tax Statement will be ready to generate and send to your recipients. You can also mark earnings as “Do Not Send” or “Hold Earning Approval.”
Approve: You have approved that the earnings and withholdings are accurate.
Hold: You'd like to put this one on hold (to the side) to come back to it later. It is not a final status.
Do Not Send: You may choose not to send some forms, such as if they earned less than $10/$600, or you will handle that form manually as it’s a particular case. Forms with this status will not be sent/delivered or included on the E-Filing with the IRS. It is a final status.
Sent: The statement has been sent to the recipient.
Voided: The statement has been voided. Only previously sent or E-Filed Statements can be voided.
Custom Table Columns
On the Review Recipient Earnings page, you can view all recipients who were paid any tax-reportable payments in the tax year. You can customize the columns shown on the table by clicking on the custom column icon on the top right of the table:
Export Data to CSV
You can export the selected table data with the “Export” button if you wish to work on it in excel. Only the filtered displayed data will be exported, so remove any filters if you want to export all data.
Note: Full TINs will not be exported for data security reasons, only masked TINs.
We have provided filters to allow you to filter recipients so you can review them in a logical order that works for you. Just press the “Filter” button to see all filter options.
We have defaulted some filters to help you with what is required.
To remove the default filters, click the “Clear Filters” link beside the “Filters” button.
Search: by recipient name, email, ID.
Earnings Status (of the recipient's EOY Tax Statement): Needs Review, Approved, Hold, Do Not Send, Sent, Voided.
Tax Form Type: W-9, W-8BEN, W-8BEN-E, etc.
Tax Statement: 1099-MISC, 1099-NEC, 1042-S, No Form
Earnings Less Than: used if you want to view all recipients that earned less than a given in the tax year. Enter a number to represent a dollar amount.
Earnings Equal or Greater Than: used if you want to view all recipients that earned more than a given dollar amount in the tax year. Enter a number to represent a dollar amount.
Delivery Method: the recipient's selected tax statement delivery method, either E-delivery or Postal Mail.
US Federal Tax Classification: for US persons that completed a W-9, you can filter by Individual, S-Corp, C-Corp, LLC, Trust, etc.
Requires Statement Delivery: see ‘All’ recipients, or ‘Yes’ to see only those that need a tax statement according to the following criteria, or ‘No’ to see those that do not require a tax statement according to the following criteria. The criteria are:
Using the Independent Personal Services threshold (More than USD 600 paid in the tax year) for Independent Personal Services income type;
Using the Royalties payments threshold (More than USD 10 paid in the tax year) for royalties income type;
Excluding C-Corporations, S-Corporations, and LLCs that elect treatment as an S-Corporation or C-Corporation, as these do not need to be sent a 1099 statement;
Includes ALL recipients that have ANY withholding (even just $0.01). This includes corporations that meet the previous criteria.
5. Process & Send End of Year Statements
After all the earnings are approved in the Review Earnings tab, it’s time to deliver them to the recipients and then E-File with the IRS. A tab is dedicated to each type of statement – 1099-MISC, 1099-NEC, and 1042-S. Specific tabs will only be visible if you have that type of Statement to send.
a. Send Statements to Recipients
Once this step is completed, all recipients (including those that selected Mail delivery) can access their statement via the Recipient Widget or Portal (whichever you are using).
Recipients will receive a notice via email if you have enabled our “Tax Statement Delivery” email. The next time they access the widget or portal, they will see a new section called “Tax Statements.” This will be accessible as a PDF and remain available until at least the 15th of October of the following year, as per IRS rules.
If you would like to send your own email communications, you can do that and choose not to have Trolley send the email on your behalf.
b. Mail Statements to Recipients
For recipients that have chosen to receive their statement by Mail (the IRS requires mail delivery to be an available option), you can send these with Trolley. We will print and send them within 24-48 hours from our fulfillment partner’s high-tech, secure mailing facility in the US. Please note there is an additional cost for statements sent by mail.
6. E-File to the IRS
After the Earnings Statements have been sent to Recipients, you can now Submit your E-File to the IRS via Trolley. Trolley will act as a transmitter to the IRS and submit the E-File on your behalf, using the information you entered in the Business Tax Profile section of the Tax Center.
After you submit the E-File, it will appear in the table at the bottom of the page.
Submitted E-Files begin with a status of “Pending.”
Once Trolley has sent the E-File to the IRS, it will be marked as “Processing.”
Once the IRS has confirmed a "GOOD" status of the E-File, then it will be marked as “Processed.”
Important: We require all customers to submit their E-File ahead of the IRS deadline to allow time for processing. See all of our important deadlines here.
After you submit the E-File to the IRS, you can download your 1099s or 1042s in CSV or PDF format.
Do I need TCC Codes and an IRS FIRE account to E-File with Trolley?
No, Trolley will manage the filing with the IRS for you. Trolley acts as a Transmitter and submits your 1099s / 1042s to the IRS for you, using your company name and EIN.
Can I download a copy of the end-of-year tax data?
This option is available once the tax statements have been submitted to the IRS via Trolley. The export file is in CSV format or PDF format. You can download this information after you have submitted your E-File to Trolley.
I need more time to complete my EoY Filings. Can I get an extension?
The IRS offers extensions to companies that require it for valid reasons. You will have to apply for an extension directly with the IRS. You can read more about applying for an extension in this article.
EOY Tax Center Pricing
Please see the complete pricing details in the Trolley dashboard.