will QuickBooks Payments issue 1099K's for ACH Payments >$600 (tax year 2023)?

Thank you for the clarification!

Hello, @katystava.

On behalf of my colleague, SirielJeaB, you're welcome. The QuickBooks Community will always be around to lend you a hand any time you need guidance.

I'll be around if you need further assistance with any QuickBooks Payments-related tasks. I hope you have a pleasant day ahead. Keep safe always! 

So any ACH payments made via Quickbooks payments (totaling >$600) still need a 1099-NEC? I'm confused about whether or not Quickbooks Payments is considered a TPSO. 

Hi, @MKOTB! Thank you for engaging in the Community space. Let me share some insights about preparing 1099-NEC reports and forms in QuickBooks Online (QBO).

The IRS doesn't allow certain electronic payments to be reported on Form 1099-MISC or 1099-NEC. These payments include credit cards, debit cards, and other third-party systems (PayPal, Gift Cards). QuickBooks Online automatically excludes these for you. The payment companies will report those payments so you don't have to. The requirement for a 1099-NEC form depends on the nature of the payment and the recipient. Generally, payments made through ACH exceeding $600 to non-employees or unincorporated businesses should be reported on a 1099-NEC.

To learn more about what payments are excluded from the Federal 1099s, I recommend checking out this link: What payments are excluded from a 1099-NEC and 1099-MISC?

For detailed information, please visit: Understand which payments are excluded from a 1099-NEC and 1099-MISC.

For future reference, I've added these articles to help you more about handling forms, printing 1099 for a vendor who doesn't meet the threshold, and other relevant matters:

• Troubleshoot common 1099 issues
• How to modify your chart of accounts for your 1099-MISC and 1099-NEC filing
•  Learn about your state's requirements for filing 1099s.

Feel free to let us know if you have other questions about your 1099 NEC form. Remember, I'll always be here in case you need further assistance.

Hi @LollyNino_C ,

Your reply seems to contain contradictory information. You write, "The IRS doesn't allow certain electronic payments to be reported on Form 1099-MISC or 1099-NEC. These payments include credit cards, debit cards, and other third-party systems (ACH, PayPal, Gift Cards). "

But then you say, "Generally, payments made through ACH exceeding $600 to non-employees or unincorporated businesses should be reported on a 1099-NEC."

So your first sentence implies that ACH payments aren't allowed to be reported on Form 1099-NEC, whereas your second sentence says they should!

Please clarify!

Hello there, @katystava.

Let me add some details for clarification about the payments included in filing 1099-NEC.

Business owners file a form 1099-NEC when a business pays for services via cash, check, or ACH (including direct deposit). However, payments made via third-party systems are excluded from the 1099-MISC and 1099-NEC calculations.

That being said, ACH payments were included when filing 1099-NEC forms.

For more information, visit this page: Understand which payments are excluded from a 1099-NEC and 1099-MISC.

On the other hand, consider scanning this material to learn more about the different boxes on your 1099 forms: Understand payment categories for the 1099-MISC and 1099-NEC.

Please update us in the thread if you have additional questions about the included payments on 1099-NEC or other related concerns in QuickBooks Payments. We're always here to help.

Thank you. But this link doesn't include any information about ACH's!

https://quickbooks.intuit.com/learn-support/en-us/help-article/form-1099-nec/payments-excluded-1099-...

I have this same question. I have paid invoices via the Quickbooks ACH option builtin to the invoices I have received. To me, that is a 3rd party payment processor, so I was trying to find if Quickbooks reports these and came across this thread but it still is not clear to me based on the replies.

If I pay a non-employee that invoiced me through Quickbooks through the Quickbooks ACH option do I need to send them a 1099-NEC?

I can share some information about 1099s, @DGCapital

You are only required to report nonemployee compensation on Form 1099-NEC when your business pays for services via cash, check, or ACH (including direct deposits). Electronic payments made using a credit card, debit card, or payment processor are reported separately using Form 1099-K. 

Intuit will fill out Form 1099-K and send it to the IRS and to you for payments you got for goods or services during the year from credit, debit, or stored value cards such as gift cards (payment cards), and payment apps or online marketplaces, also called third-party settlement organizations or TPSOs like Intuit. You can find more information in this IRS article: Understanding your Form 1099-K.

For the tax year 2023, you will receive a Form 1099-K if your gross reportable payments exceed $20,000 and the number of transactions exceeds 200. You can download your Form 1099-K from the Merchant Service Center by January 31st. You can find more information in this article: How Intuit generates Form 1099-K. 

Here's how to resolve missing contractors or wrong amounts on 1099s in case you need help adding a contractor or changing an amount when you create your 1099s. 

Please let me know if you need any more information about 1099s. The Community is always here to answer your questions. Have a wonderful day!

The answer is still not clear to me.

Can someone from the Intuit team please provide a clear yes or no answer to the following questions?:

1) Is QuickBooks Payments considered a third-party settlement organization? Yes or no?

2) If yes, is it safe to assume that QuickBooks Payments, as a TPSO, will issue a 1099-K for ALL transactions received through QuickBooks Payments, even ACH payments of invoices that were initiated by the "Review & Pay" link directly embedded in the email sent from QuickBooks containing the invoice? Yes or no?

Thanks for coming back, SB_M.

Yes, QuickBooks Payment is a third-party payment processor. A third-party payment processor is a service that allows businesses to accept online payments. These payment processors facilitate transactions between the customer and the business by transferring funds from the customer’s bank or credit account to the business bank account.

Also, QuickBooks Online can only integrate directly with QuickBooks Payments merchant services. You cannot transfer or process transactions directly with Citibank, Wells Fargo, Chase, or any other merchant accounts in QuickBooks Online. Intuit QuickBooks Payments will submit Forms 1099-K to all states that require 1099-K filing. The Form 1099-K is an IRS informational form for you, the IRS, and some states.

The IRS requires payment settlement entities (PSEs) like Intuit QuickBooks Payments, to report payment card and third-party network transactions. For tax year 2023, the IRS requires a Form 1099-K when payments gross more than $20,000 and there are more than 200 transactions. Just in case you meet the 1099-K reporting threshold, your Form 1099-K will be available for download from the Merchant Service Center by January 31, 2024. To learn more about this one, check out this article: Tax Compliance for Payment Processing Accounts.

In case you need assistance with this, please contact our Merchant Services Team. You can also check the article about the deposit times if you're expecting payment and detailed steps on setting up automatic credit card payments for recurring invoices:

• Find out when QuickBooks Payments deposits customer payments.
• Set up Autopay for recurring invoices in QuickBooks Online.

If you need further assistance managing your payments in QBO, let me know in your reply. I’ll be around ready to help you. You have a good one. 

Thank you for your answer. 

So to confirm, if our company paid $1,000 to a vendor from the "Review & Pay" link embedded in the email that was sent from QuickBooks containing the invoice and we selected the ACH payment option, QuickBooks Payments, as the 3rd party payment processor, is responsible for reporting that payment on 1099-K (if the vendor reaches the threshold). Our company is not responsible for reporting that payment of $1,000 on a 1099-NEC. Is that correct? Yes or no?

I understand the importance of ensuring that the reporting payments are clear and properly handled, SB_M. 

When a payment is made through a third party, the responsibility for reporting that payment on tax forms such as 1099-K typically falls on the payment processor. This is why, in this scenario, Yes, you're correct. Your company is not required to report that $1,000 payment on a 1099-NEC.

For more information on preparing and filing your 1099s with QuickBooks, please feel free to browse through the articles below:

• Create and file 1099s with QuickBooks Online
• Correct or change 1099s in QuickBooks

If you have any other questions about 1099, please never hesitate to utilize the Reply button. I'll be around to make sure you're all set. Take care.

Thank you for you help in clarifying this for me. Much appreciated.

You're most welcome, SB_M.

I'm happy that my colleague was able to assist you in clarifying about reporting payments through a third-party processor. Rest assured that we will continue to give the best customer service you ever experienced.

Let us know if you have other concerns in the comments below. We're always here to assist.