Entering Overpayments As Gratuities QB Desktop Pro 2018

You first have to clear the overpayment from the customer. When you receive the overpayment you may get prompted about keeping the money as a credit or refunding it, If you have not created the credit first you will do so now. Post the internal c.m. detail to a current liability account for the tips.  Then when you disburse the tips you will pull from this liability account.

That is how you would "pass-through" the gratuities without it affecting your P&L.

But if you need to show the extra money out to the sub-contractors on their 1099 then you would record the overpayments to an income account and the payout as tip or bonus expense.

As to which method you should choose and considering there are tax consequences with one over the other I will leave that decision up to you.  It may depend on how your customers are thinking in regards to overpaying you - are you slipping in extra costs they are unaware of or are they consciously earmarking extra for the subs.

Thanks for the good info. These “overpayments” are the result of my recently including a line in my invoice cover letter about customers adding a gratuity amount for my subs to their invoice payment. So they are legitimate. To my surprise, not only are the customers actually reading the cover letter but acting upon it as well! 😜