Exclude nonreportable payments from Form 1099-MISC for Quickbooks users.
This article explains how to exclude nonreportable payments from Form 1099-MISC.
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.
You will be able to file accurate Form 1099-MISC.
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.
- 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.
- 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.
- 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:
- Date the journal entry with the last day of the tax year.
- 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.
- 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.