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Understand which payments are excluded from a 1099-NEC and 1099-MISC

SOLVEDby QuickBooksQuickBooks Online420Updated 7 days ago

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

The IRS requires that certain contractor payments should not be included on the 1099-MISC and 1099-NEC form and are instead reported on the 1099-K form.

Small businesses don't file form 1099-K. It is required for third-party payment processing companies, banks, credit card processors, etc. to file.

For more information about the payments that you shouldn't report, review the IRS instructions for Form 1099-K.

If you need a 1099-K from Intuit, see Intuit 1099-K Form.

Ready to file your 1099s, see Get answers to your 1099 questions.

Which payments are excluded from the 1099-MISC and 1099-NEC form?

Payments to 1099 vendors made via credit card, debit card, or third-party system, such as PayPal, are excluded from the 1099-MISC and 1099-NEC calculations. This is because the financial institution reports these payments, so you don't have to.

Where can I find the payment information?

Choose your product to determine what payments are excluded.

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

  1. Go to Payroll and select Contractors (Take me there) or Contractors and select Contractors.
  2. Select Prepare 1099s then select Let's get started or Continue your 1099s.
  3. Go to the Check that the payments add up window.
  4. Note the column titled Excluded. 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.
  1. Go to Reports, then select Vendors & Payables.
  2. Select 1099 Summary.
  3. In the 1099 options dropdown menu, select All allowed accounts.
  4. If you find the missing vendor, find the Account and determine if it was used to make credit card payment.
    1. Double-click the amount in the Total column for your Vendor.
    2. In the 1099 Detail report make note of the Accounts in the Account column.
  5. To show these transactions on 1099 reports and forms
    1. Go to Edit, then select Preferences.
    2. In the Preferences window, select Tax:1099 from the left pane, then select Company Preferences tab.
    3. Select the link click here next to If you want to map your accounts to boxes on form 1099-MISC.
    4. QuickBooks 1099 wizard page will come up. You will be directed to Map Accounts. This window displays all accounts used for payments to 1099 vendors. From the Apply payments to this 1099 box dropdown, choose one of the 1099 boxes.
  6. Once done, close the 1099 Detail report.
  7. Select the second 1099 Options drop-down, then select Only 1099 accounts.

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