Omit payment of a vendor expense reimbursement from their 1099

Good day, accounting-thear.

I'd be glad to share some information about excluding payment to a vendor from their 1099 in QuickBooks Online. 

When preparing 1099 forms, IRS requires 1099 filers to exclude any payments you made to a 1099 vendor by credit card, debit card, gift card, or a third-party payment network such as PayPal from Form 1099-MISC. These payments are considered non-reportable payments. These payments are reported by the card issuers and the third-party payment networks on Form 1099-K. 

You can read this article to know when to exclude payments on form 1099: Vendor Payments to Exclude on Form 1099-MISC.

To clarify things about excluding amounts from 1099, I recommend seeking help from your accountant. He/She could guide you on what to do about your 1099. Or contact the IRS for further discussion on the compliance side of 1099.

I encourage reading these articles to be guided in preparing tax forms in QuickBooks Online:
 

• Vendor payments to exclude on form 1099-MISC
• Common questions about 1099s
• Prepare and file 1099s using QuickBooks Online

If you have any other concerns or follow-up questions about 1099, please don't hesitate to visit the Community again. Assistance is just a post away.

Thank You, LeizyIM.

Yes, I am aware of which payments to exclude from a vendor’s 1099. 

My question pertains to how to input the expense into Quickbooks online without it being recorded by Quickbooks on the vendor’s 1099. When I record the reimbursement as an expense that is payable to the vendor, Quickbooks lists it as part of their 1099. This would seem to be an issue for any of the items you listed as well. Even if you make a vendor payment by PayPal, it will still need to be recorded as an expense in Quickbooks to keep my account balance accurate, but Quickbooks is still adding any type of payment to a vendor to their 1099 balance. How to I make it so Quickbooks will not add these excluded expense payments to the vendor’s 1099 total?

 Thank you. 

Thank you for providing us with further information about your initial queries, @accounting-thear.

I'd like to add some more information about removing an expense from 1099 forms.

If you don't want the expense/account to appear on the form, make sure it's excluded from the 1099 mapping.

I'll show you how you can do it:

1. Open the Payroll menu from the left pane.
2. Select Contractors/Vendors.
3. Click on Prepare 1099's.
4. From the Accounts section, unselect the expense account you don't want to show.
5. Once done, click on Next or Save and finish later.

For reference, see these photos:

In addition, I'd also suggest consulting your accountant. This way, you can verify if it's advisable to exclude those amounts.
 

You can also check out these helpful articles about handling 1099's in QuickBooks Online:

• Understand which payments are excluded from a 1099-NEC and 1099-MISC
• FAQ's about 1099 filing.

Keep us updated by leaving a reply to this thread. I'm more than happy to assist if you have other concerns with 1099 or QuickBooks in general. Keep safe and have a great week ahead!

I have a similar (the same?) question. Is it possible to omit certain payments but retain others when they both use the same account? For example, we pay vendor #1 for services that fall under the account Office Expense. Vendor #2 pays some of our expenses that fall under Office Expense, and then we reimburse them. Money paid to vendor #1 should show up on a 1099, but money paid to vendor #2 should not.

I cannot simply un-map Office Expense, because we need it in some cases (like for vendor #1).

Thanks for joining in on this thread, Laurakan. I'll provide some information to help you omit certain payments and not include money paid to vendor 2 in 1099.

If you paid your 1099 contractors and posted their payments to the same account, we'll need to modify your chart of accounts to ensure the account used for Vendor 2 won't show up on your 1099.

To guide you in performing this, let's first run a 1099 Transaction Detail report to identify the amounts paid and if they're on the correct account.

Here's how:

1. Go to Reports on the left menu.
2. Search for the 1099 Transaction Detail Report.
3. Run the report. 

After doing so, let's create a new account on your Chart of Accounts to track the separate payments. To do this:

1. Go to the Settings icon and select Chart of Accounts.
2. Click New account or New category. 

To guide you on the next steps in creating a new account or category, you can refer to Step 2 under the QuickBooks Online (QBO) dropdown: Modify your chart of accounts for your 1099-MISC and 1099-NEC filing. Also, you can refer to Step 3 from the article to help you edit previous contractor payments to the new accounts.

To validate and ensure the changes to your accounts, follow the steps below:

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

Once everything's on track, I've added this link to help you prepare and file your 1099s: Create and file 1099s with QuickBooks Online. This way, you can seamlessly submit your forms and check your filing status. 

You're always welcome to get back to this thread if you need additional assistance with your 1099s. We'll be around to help you. Have a great day!

Thanks for that detailed reply, @FateCandylaneT. If I understand correctly, I need to have one account in the COA for "1099-able" payments and another for payments that will not trigger a 1099. Is that right? If so, it sounds like this would work not just for payments that could trigger a 1099-NEC or MISC, but also for payments that may or may not trigger a single type of 1099 (NEC in my case). Is that also right?

Yes, you're all right, @laurakan.

You must create a new expense account for each account reported on the 1099-NEC or 1099-MISC because only one account can be used for each form. Then, once a new expense account is set up in your QuickBooks file, you'll need to use a journal entry to move the amounts from one account to another.

I recommend reading this article to learn more about what to do if you want to file both a 1099-MISC and a 1099-NEC: Modify your chart of accounts for your 1099-MISC and 1099-NEC filing.

Also, you may want to check out this article as a reference to answer the most commonly asked questions about 1099 forms and how you can prepare for the tax season in QuickBooks Online: Get answers to your 1099 questions.

Don't hesitate to post again if you have other concerns about filing a 1099. I'd be happy to assist you. Have a good day and take care. 

This is an old thread, but I feel like having a second expense account is cumbersome on the GL. We do it by creating one vendor entitled John Smith - 1099 (use the Vendor Display name and make sure "Name to Print on Checks" doesn't include the '-1099'. We create a second vendor entitled "John Smith - Reimb" to pay for those items that shouldn't be on 1099s. This way the actual expenses can go to the proper GL accounts.