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Vendor payments to exclude on form 1099-MISC

Learn which payments should be excluded from the 1099-MISC form.

The IRS requires that certain vendor payments are excluded from the 1099-MISC form and are instead reported on the third party 1099-K form. In this article, we'll answer the most commonly asked questions about this regulation.

Payments to 1099 vendors made via credit card, debit card, or third party system, such as PayPal, are excluded from the 1099-MISC calculations.

Credit Card payments will be filtered by account type. Other payments will be filtered by keywords (such as “Debit”  in check # field or in the memo field).

The keywords used to filter are Debit, Debitcar, DBT, DBT card, DCard, Debit cd, Visa, Masterc, MC, MCard, Chase, Discover,  Diners, Paypal. If you don't want to exclude the payment, use the word "EFT."

You can run an Excluded Payments by Vendor report to verify excluded payments.

  1. Select Expenses, then Vendors.
  2. Select Prepare 1099s.
  3. Go to the Preview 1099 and 1096 Information section and note the column titled Total 1099 Payments Excluded.

preview 1099 and 1096 forms in QuickBooks Online

You can select the total in this column to see an Excluded Payments by Vendor report, which shows transaction details. This will help you verify if payments should indeed be excluded.

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