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    Exclude nonreportable payments from Form 1099-MISC for Quickbooks users.

    Article ID: 1002600

    Overview

    This article explains how to exclude nonreportable payments from Form 1099-MISC.

    Assumptions

    You are using QuickBooks and you:

    • want to manually print your 1099-MISC Forms, and
    • paid only a few vendors this payment types other than cash or check.

    Expected Outcome

    You will be able to file accurate Form 1099-MISC.

    Details

    As of tax year 2011, the IRS requires you to exclude certain payments types from the 1099-MISC forms you issue to vendors. In the event the payment was made through a third party payment processors, such as credit card companies or Paypal, and will show on 1099-K forms filed from those processors, it should be excluded from your form 1099-MISC.

    To exclude non reportable payments in QuickBooks 2011 and earlier:

    Determine whether you made any nonreportable payments to 1099 vendors during the tax year. You can do that in either of the following ways:

    • Option 1: From the Vendor Center, select a 1099 vendor, show All Transactions, and select a date range for the reporting period

    • Option 2: Create a 1099 Detail report by choosing Reports >Vendors & Payables: 1099 Detail. Look for nonreportable payments such as credit card charges, check transactions that represent credit or debit card charges or any general journal entries that represent nonreportable payments.

      Note: Only consider payments made from accounts that you have mapped to boxes on Form 1099-MISC.

    Do not create 1099-MISC froms for vendors paid exclusively by nonreportable payments. To remove them from 1099 processing, edit the vendor s record and uncheck the Vendor eligible for 1099 box on the Additional Info tab.

    Exclude any nonreportable payments paid for the vendor from the 1099-MISC form.

    1. Total the nonreportable payments for a vendor, and subtract the nonreportable payments from the total payments for that vendor. The result is the total reportable payments.
    2. If the amount of the reportable payments for a 1099 vendor is less that the IRS reporting threshold amount, you do not have to prepare the 1099-MISC for the vendor. Remove the vendor from processing as in step 2 above.
    3. If the amount of reportable payments for a 1099 vendor exceeds the IRS reporting threshold amount, create a journal entry for the vendor that offsets the nonreportable amount:

      1. Date the journal entry with the last day of the tax year.
      2. On the first line of the entry, specify an account (such as "Opening Balance Equity") that is not mapped to a 1099 box. Create a debit to this account in the amount of the vendor's nonreportable payments.

        Note: Be sure to include the vendor's name in the name column.
      3. On the next line(or subsequent lines if you paid the vendor from multiple accounts), enter the account from which you made nonreportable payments and create a credit to this account in the amount of those nonreportable payments.

        Note: these credit entries reduce what is reported on Form 1099-MISC and must total the amount of the first debit entry.

    Create your Forms 1099-MISC for the year as usual.

    If journal entries were created to exclude nonreportable payments, void those entries once the 1099-MISC Form is sent to the vendor and submitted to IRS to ensure that financial statements in QuickBooks are not impacted going forward.

    2 comments

    Daniel2/12/2013

    What if I have a vendor to whom we made a variety of payments - some of the payments were 1099 eligible and some were not. What do I do in this case to report the correct figures? There seems to be no way to override the figures like in other forms.

    Reply

    Kriz2/23/2013

    10

    Hi Daniel,

    I'm an Intuit employee and I wish I have read your comment sooner. I hope that you were able get the correct amount reported on the 1099 form.

    But if not, this article provides the steps on how to report the correct 1099 amount for your vendors. I have updated this article to make finding the steps to exclude payments that are not to be reported on the form easier.

    Also, I would suggest that you create a different account to use for nonreportable 1099 payments to make identifying the correct reportable amount easier.

    Thank you for posting a comment!

    Comments can not be added at this time.

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