How do I correct a 1099 to a vendor who partially forgave a portion of the amount owed to them?

Hello, jburski.

I'd be glad to provide a solution to help you correct your 1099 report. 

You'll want to check the bill or invoice payment date. The 1099 report also depends on the dates, not just the accounts involved. This is the reason why it only reflects the amount forgiven. 

To change the bill payment date: 

1. Go to Expenses, then click the Vendors tab.
2. Find and select the vendor's profile.
3. Look for the Bill Payment transaction.
4. Set the Payment date to the correct date. 
5. Once done, click Save and close. 

This will reflect the correct payment amount made to the vendor. 

If you need help filing the 1099 form, this article can provide more details on the process: Create and file 1099s using QuickBooks Online.

Ready to take care of other taxes in QuickBooks Online? Browse our articles under the Taxes topic for guides and important details. If you need help with other tasks, you can see other articles in our QuickBooks Online articles list. 

I'd be happy to help you out again if you have other questions handling your vendor payments. Feel free to ask if you have other concerns for QuickBooks Online, too. 

Good afternoon.  This solution did not work for me.  The vendor credit was dated 05/22/2020, and the date the bill was paid with this credit also reflects a date of 05/22/2020.  However, my 1099 report has an amount paid to that vendor that is $4257.98 MORE than the amount we actually paid them (which is the amount of the credit).

Any additional help you can give would be greatly appreciated!

Thanks for the clarification, @jburski

I also appreciate you for taking the time in going through the process my colleague shared above.

Any payments made through bills and expenses will show up as payment in the Box 7 if the expense accounts are mapped for 1099 setup. While I’m unable to recommend what account to use to map the credit, I suggest consulting with your accountant for guidance.

Your accountant can give you their expert advice on which account to use to post the amount. This way, we can ensure your 1099 is recorded correctly. If you’re not affiliated with one, you can visit our ProAdvisor page and look for one from there.

To be guided in preparing 1099, you can check these resources for reference:

• Prepare and file 1099s.
• Create a 1099 report for vendors and vendor payments
• 1099-MISC box 7: Nonemployee compensation

Tag me in your reply if you have any other concerns or questions about vendor credits and your 1099 in QuickBooks. I’ll be around to ready to help you whenever I can. Keep safe and have a great day!