Year-end tax reporting always brings new questions, and this year is no exception. The IRS has introduced another round of changes to 1099 reporting for tax year 2025 that impact both Sage X3 and Sage 500 users.

This blog provides a practical overview of the changes your tax filing team should be aware of, along with the software requirements for each platform that must be met before starting the filing process to ensure compliance with 2025 IRS regulations.

What is changing for 2025 1099 reporting

The most significant update affects how excess golden parachute payments are reported. For tax year 2025, these payments will no longer be reported on the 1099 MISC form. Instead, they will be reported on the 1099 NEC form in Box 3.

This change applies to both Sage X3 and Sage 500 environments, and additional software updates may be required to ensure accurate reporting.

Sage X3 1099 highlights

The changes to the 1099 MISC and 1099 NEC forms described above are included in the latest 1099 hotfix and will also be part of the 2026 R1 release version 12.0.39. Forms 1099 DIV, 1099 INT, and 1096 have not changed.

To ensure compliance when filing, your Sage X3 environment must meet the following requirements:

  • Minimum version required is 2023 R1 (Version 12.0.33)
  • If you are on an earlier version, you must first install the Sage X3 Version 12.0 1099 2022 hotfix
  • This patch applies to Version 12 only and requires 2019 R5 (Version 12p20) or higher

The purpose of the 1099 cumulative patch is to update the X3 environment with the latest tax reporting changes. The cumulative patch includes previously delivered 1099 fixes that are not dependent on your current patch level, including tax filing form and box changes for tax years 2017 through 2021.

Sage 500 updates and requirements

Sage has released year end updates for Sage 500 to support 1099 reporting for tax year 2025, and there are several important considerations we want our clients to be aware of.

  • Tax year 2025 is the final year we expect to provide 1099 updates for version 2018.
  • To continue receiving updates in future years, an upgrade to a newer Sage 500 ERP version will be required.
  • You should not submit 1099s through Sage 500 ERP until the 1099 Stand Alone updates have been applied.
  • 1099 data must be at the tax year 2022 level.
  • In tax year 2026, Sage 500 ERP version 2019 will be the final version to be delivered.
  • Updates are not cumulative and rely on accurate and current 1099 data.
  • For organizations interested in using tax filing software, Sage 500 supports Aatrix for 1099 processing.

For golden parachute payments, continue entering data in MISC Box 14. The 1099 Stand Alone updates and product updates will automatically move this data to NEC Box 3. If you do not have any data in this box, you will still be unable to submit 1099s until the tax year 2025 Stand Alone updates are applied.

Your accounting team should also review IRS regulations related to paper versus electronic filing. If electronic filing is required and you have not submitted electronically before, you may need to set up an account with your service provider in advance.

Important next steps

Users of both Sage X3 and Sage 500 should confirm that their current software versions meet the requirements outlined above. If updates are needed, we recommend completing them as soon as possible to avoid last minute filing issues and ensure compliance with current IRS requirements.

If you have questions about these updates or need assistance applying them, please let us know so we can help you prepare.