Do I include ACH payments made using Quickbooks Online Payments in the 1099 Calculations or Exclude?

Hi there, streamlinemm.

Thank you for visiting us on the Community page. I can share with you some insights about excluding payments in 1099s in QuickBooks Online and how it works.

Usually, we'll automatically exclude payments you don't need to include on 1099s. That said, payments to 1099 vendors made via credit card, debit card, or any third-party system such as PayPal and other electronic payments are excluded from the 1099-Misc and 1099-Nec calculations. This is because the financial institutions will report these payments.

On the other hand, once you have a QuickBooks Payments product and you have processed at least 200 card transactions and $20,000 in gross sales during the previous calendar year, we generate a 1099-K form for you on or before January 31. To see further details, you can open this article: Get answers to your 1099 questions.

Lastly, you may refer to this article to view different details on what forms or boxes you have to choose so you'll be able to file 1099 accurately: Understand payment categories for the 1099-MISC and 1099-NEC.

Don't hesitate to post again here if you have further questions about 1099 in QuickBooks. I'll be around to help and provide answers to achieve your goal. Have a good day!

Can you be more straight forward? That reply was not helpful AT ALL! I specifically asked if Quickbooks Payments will send a 1099K if the payment was an ACH through their payment system. Yes or No?? And also, I learned that Quickbooks does not exclude payments made with a debit card because the debit card is attached to the bank account and the software is not recognizing those payments as a debit card transaction since the bank account is not listed as a credit card in the COA - so I would not trust the 1099 calculations. Please post straight-forward answers. 

Thank you for getting back to us, @streamlinemm. Let me add some information about 1099K.

Yes, QuickBooks will send 1099k for ACH payments. And yes, debit card payments are excluded with QuickBooks 1099K calculations.

If the IRS requires it, you will receive a 1099-K form by January 31 of each year. By February 1 of each year, forms will be available in the Merchant Service Center. QuickBooks Payments will file a copy of the 1099-K with the IRS in April of each year. We must have your exact taxpayer ID number (TIN) and tax filing name to comply with the law. If we get a notice that the information on your merchant account is incorrect, we will send you a separate notification so that you can swiftly validate your tax information.

Check this article to learn more about Tax compliance for credit card accounts: Tax Compliance for Credit Card Accounts.

You can also check for answers to your 1099 questions in this link:  Get answers to your 1099 questions.

If there's anything else that I can help you with about 1099K, drop a comment below. I'm always here to help you.

THANK YOU!!! 

Also, the debit transactions I was referring to that are not automatically excluded are the ones that do not go through QuickBooks Payments Merchant system. I am talking about transactions that are outside of the QuickBooks Payments and are just transactions entered. For example, if my husband's construction business uses a debit card to pay a subcontractor over the phone, and I go and enter the transaction into QBO as an expense that went through the main bank account that is connected to the debit card and then select "debit card" on the pay type, at the end of the year, that transaction will NOT be excluded and it should be. I am having an issue right now with this in the calculations because we paid many subcontractors with a debit card and those payments are not being excluded. I thought that selecting "this is a credit card" on pay type list would fix this but it does not. 

Hello, @streamlinemm.

The amounts reported in 1099 are based on the expense accounts you've mapped for each transaction type. And I'd be glad to help you exclude the amount.

We'll need to change the transaction category that isn't included in the mapped category of Box 7. This way, it will be excluded from your 1099. Here's how:

1. On the left panel, click Expense, then Vendors.

2. Select the vendor/company name.

3. Find the transaction and click View/Edit under the Action column.

4. Under the Category column, change it into a different category type.

5. Click Save and close.

You can check the screenshots below for your reference.

Most importantly I encourage seeking advice from your accountant or tax preparer first. You can ask him/her if it's advisable to exclude those amounts.

Please feel free to leave a comment below if you have any other questions1.