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Modify your chart of accounts for your 1099-MISC and 1099-NEC filing

SOLVEDby QuickBooksQuickBooks Desktop Payroll378Updated December 22, 2022

Learn what you need to do in QuickBooks Online and QuickBooks Desktop if you need to file both a 1099-MISC and 1099-NEC.

With QuickBooks you can elect to print and e-file your 1099-MISC and/or 1099-NEC. To create these forms there are a few steps you can take now to ensure your chart of accounts are properly mapped for both the 1099-MISC and 1099-NEC forms and reports.

Learn more about filing your 1099s this year.

What do I need to do before I e-file both forms?

IMPORTANT: You only need to follow the steps below if you need to file both a 1099-NEC and a 1099-MISC and haven't separated your accounts. This is determined by which types of boxes you select when you create your 1099s in QuickBooks. Most businesses only select “non-employee compensation” for contractor payments. In this case, no adjustments are needed, and you do not need to continue with this article. However, if you do need to select other types of payments to report, you’ll need to adjust your accounts and payments to prepare your books. Follow this article to update your company file.

If you need to file both forms

Due to the introduction of the new form, if you need to file both the 1099-NEC and the 1099-MISC, you will need to create a new expense account for all the accounts that will be reported on the 1099-NEC or 1099-MISC. A single account can only be used for each form. Then, once you have set up your new expense account in your QuickBooks file, you will need to use a journal entry to move the amounts from one account to another. We'll walk you through how to do this. It should take under 30 minutes.

For example, if you need to file both forms and you only have one set of accounts you have been paying your vendors from, you will need to create a new list of accounts to report amounts to the new 1099-NEC form. You will then need to create journal entries to move the amounts from one account to another.

For more details about the new 1099-NEC form and instructions, visit the IRS for additional information.

Set up QuickBooks for the 1099-MISC and 1099-NEC forms

If you paid 1099-MISC and 1099-NEC contractors and posted to the same account, you will need to edit your chart of accounts to ensure separate accounts are available for each form to use.

Then, you can either create a journal entry to move amounts to show in the newly created 1099-NEC or 1099-MISC accounts or you can edit existing payments to the new accounts.

Follow steps for your version of QuickBooks.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Create a 1099 Transaction Detail Report

Identify the amounts paid and to which accounts.

  1. Choose Reports.
  2. Search for the 1099 Transaction Detail Report.
  3. Run the report and verify the amounts are showing in the correct accounts for the 1099-NEC and 1099-MISC. This will allow you to map the accounts as you go through the 1099 process.
    You can also use the 1099 Contractor Balance Detail or 1099 Contractor Balance Summary reports if either of them add more information.

Step 2: Add a new account

Add a new account to your Chart of Accounts to track the separate payments.

  1. Go to Settings ⚙ and select Chart of accounts.
  2. Select New. Depending on your account view, you’ll either see a panel labeled New account or New category. Select the option you see below for next steps.
  1. Select the Save account under ▼ dropdown to select the type of account, Expense, Other Expense or Cost of goods sold. To narrow the scope of account types, you can select one of the account type buttons above the dropdown.
    Note: Subaccounts appear indented in this dropdown menu, while parent accounts aren't. Learn more about parent accounts and subaccounts.
  2. In the Tax form section ▼ dropdown, select the detail type that best fits the transactions you want to track. Learn more about detail types.
  3. Enter a name in the Account name field. (ex. 1099-NEC Federal Income Tax Withheld)
  4. Optionally, enter a description in the Description field.
  5. When you're done, select Save.
  6. Repeat this process for each new account to be reported on the 1099-NEC or 1099-MISC.

If you see the New category panel, you’re creating a subaccount under a premade parent account. If you need to create a new account type, switch to accountant view.

  1. In the Category name field, enter a name for the category (subaccount). (ex. 1099-NEC Federal Income Tax Withheld)
  2. Select the Select category link, then select Expense
  3. Select Next.
  4. Select the new Expense subaccount. If you see an arrow > next to a category, select it to see even more detailed categories. 
  5. When you're done, select Save.
  6. Repeat this process for each new account to be reported on the 1099-NEC or 1099-MISC.

Step 3: Move the payments to the new account.

You can choose to create a journal entry to move amounts to show in the newly created 1099-NEC or 1099-MISC accounts or you can edit existing payments to the new accounts.

Add a journal entry

  1. Select New +, then select Journal Entry.
  2. Fill out the fields to create your journal entry.
  3. Select Save and new or Save and close.
  4. Repeat this process for each payment you need to move.

or

Edit existing contractor payments

  1. Select Expenses.
  2. Filter the transactions to identify the contractor payments you need to edit.
  3. Once the payment has been located, you can either select View/Edit to go into the transaction or select the Category dropdown and select a new account.

Step 4: Validate your changes

Create a 1099 Transaction Detail Report to validate the changes to your accounts.

  1. Choose Reports.
  2. Search for the 1099 Transaction Detail Report.
  3. You should see the changes reflected.

Once these steps are completed, you are ready to begin filing your 1099-MISC and 1099-NEC forms.

Step 1: Backup your QuickBooks Desktop file

Before you begin to adjust your QuickBooks Desktop file, create a back up. If you will need to amend prior year forms, you will need to restore this backup to access the forms and data from before 2020. The data for prior years will not show accurately once you map the new boxes on the new forms.

Step 2: Create a 1099 Summary report

Identify the amounts paid and to which accounts.

  1. Go to Reports, then select Vendors & Payables.
  2. Choose either 1099 Summary or 1099 Detail.
    Note: Reports will default to the Last Calendar Year, so be sure the report is set up for the correct date range next to Dates at the top of the report.
  3. Use the 1099 Summary to identify the vendors and the 1099 Detail to identify the transactions. Review the totals under to determine what amounts may need to be moved.
    Important: Once you edit your accounts or payments, your previous reports will update and not reflect prior year filings. You may want to print these reports for your records before making any adjustments.

Based on your needs to file both the 1099-MISC and 1099-NEC you will need to adjust your Chart of Accounts to ensure accounts are set up specifically for each form.

Step 3: Create a new account

Add a new account to your Chart of Accounts to track the separate payments.

  1. Go to Lists, then select Chart of Accounts.
  2. Select the Account dropdown, then choose New to create a new account.
  3. Select an account type of Expense, Other Expense or COGS, then select Continue.
  4. Enter the Account Name and details such as Description, Note and Tax-line Mapping.
  5. Select Save & Close.
  6. Repeat this process for each new account to be reported on the 1099-NEC or 1099-MISC.

Step 4: Move the payments to the new account.

You can choose to create a journal entry to move amounts to show in the newly created 1099-NEC or 1099-MISC accounts or you can edit existing payments to the new accounts.

Add a journal entry

  1. Go to Company and select Make General Journal Entries.
  2. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
  3. Select Save & Close or Save & New if you have more entries to make.
  4. Repeat this process for each payment you need to move.

Edit existing contractor payments

  1. Select Vendors then Vendor Center.
  2. Choose the vendor and locate the transactions you need to edit.
  3. Double-click to open the transaction to make your edits.
  4. After you have made the changes, select Save & Close.
  5. Repeat this process for each payment you need to change.

Step 5: Create a 1099 Summary report

Run a 1099 Summary or 1099 Detail report to validate the changes to reflect the correct amounts in each account for both the 1099-NEC and the 1099-MISC.

  1. Go to Reports, then select Vendors & Payables.
  2. Choose either 1099 Summary or 1099 Detail.
    Note: Reports will default to the Last Calendar Year, so be sure the report is set up for the correct date range next to Dates at the top of the report.
  3. You should see the changes you made reflected.

Once these steps are completed, you are ready to begin filing your 1099-MISC and 1099-NEC forms.

Step 1: Backup your QuickBooks Desktop file

Before you begin to adjust your QuickBooks Desktop for Mac file, create a back up. If you will need to amend prior year forms, you will need to restore this backup to access the forms and data from before 2020. The data for prior years will not show accurately once you map the new boxes on the new forms.

Step 2: Create a 1099 Summary report

Identify the amounts paid and to which accounts.

  1. Go to Reports, then select Vendors & Payables.
  2. Choose either 1099 Summary or 1099 Detail.
    Note: Reports will default to the Last Calendar Year. Select Customize to be sure the report is set up for the correct date ran. You can also adjust the 1099 option to narrow your 1099 form type.
  3. Use the 1099 Summary to identify the vendors and the 1099 Detail to identify the transactions. Review the totals under to determine what amounts may need to be moved.

Based on your needs to file both the 1099-MISC and 1099-NEC you will need to adjust your Chart of Accounts to ensure accounts are set up specifically for each form.

Step 3: Create a new account

Add a new account to your Chart of Accounts to track the separate payments.

  1. Go to Lists, then select Chart of Accounts.
  2. Select the + button to create a new account.
  3. Select an account type of Expense, Other Expense or COGS.
  4. Enter the Account Name and details such as Description, Note and Tax-line.
  5. Select OK.
  6. Repeat this process for each new account to be reported on the 1099-NEC.

Step 4: Move the payments to the new account.

You can choose to create a journal entry to move amounts to show in the newly created 1099-NEC accounts or you can edit existing payments to the new accounts.

Add a journal entry

  1. Go to the Company menu and select Make General Journal Entries.
  2. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
  3. Select Save & Close or Save & New if you have more entries to make.
  4. Repeat this process for each payment you need to move.

Edit existing contractor payments

  1. Select Vendors then Vendor Center.
  2. Choose the vendor and locate the transactions you need to edit.
  3. Double-click to open the transaction to make your edits.
  4. After you have made the changes, select Save.
  5. Repeat this process for each payment you need to change.

Step 5: Create a 1099 Summary report

Run a 1099 Summary or 1099 Detail report to validate the changes to reflect the correct amounts in each account for both the 1099-NEC and the 1099-MISC.

  1. Go to Reports, then select Vendors & Payables.
  2. Choose either 1099 Summary or 1099 Detail.
    Note: Reports will default to the Last Calendar Year. Select Customize to be sure the report is set up for the correct date ran. You can also adjust the 1099 option to narrow your 1099 form type.
  3. You should see the changes you made reflected.

Once these steps are completed, you are ready to begin filing your 1099-MISC and 1099-NEC forms.

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