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

by Intuit•14• Updated 2 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.

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.

Note: When you create an expense transaction, choosing Credit Card as the payment method won't exclude it from your 1099 reports. If you want to exclude it, you need to use a Credit Card account from the Chart of Accounts within the expense transaction.

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

How'll my contractors get a 1099-K?

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

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

Where can I find the payment information?

Choose your product to determine what payments are excluded.

QuickBooks Online and QuickBooks Contractor Payments

Payments are excluded if the following terms are in the check number field: Debit, Debitcard, DBT, DBT card, DCard, Debit cd, Visa, Masterc, MC, MCard, Chase, Discover, Diners, Paypal

You can run a report to find excluded payments.

Go to Payroll and select Contractors (Take me there).
Select Prepare 1099s.
Go to the Review recipients and payments totals window.
Select the ‌Tracked for 1099s tab.
From the Reportable payments only ▼ drop-down select Non-reportable payments only.
Note the column titled Non-reported totals. You can select the totals in this column to see a report that shows payments not included in the 1099 NEC or MISC totals. Including payments under the threshold. This will help you double-check if payments should indeed be excluded.

Note: If you have Payroll or Contractor Payments without QuickBooks Online, this scenario doesn't apply. Payments by credit card are only supported with a QuickBooks Online accounting subscription.

QuickBooks Desktop

Go to Reports, then select Vendors & Payables.
Select 1099 Summary.
In the 1099 options dropdown menu, select All allowed accounts.
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.
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.
Once done, close the 1099 Detail report.
Select the second 1099 Options dropdown, then select Only 1099 accounts.

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