Banking

I've got your back on recording a refund from the bill payment that was processed last year, @patrick3.

Firstly, I want to appreciate the efforts you've taken to learn how to handle this situation. To sort it out, you'll have to enter a vendor credit instead of writing a check. And create a vendor refund using a bank deposit with the last year's date. Then, link them together.

Before we start, please be guided that recording this transaction may affect your QuickBooks' current data. Thus, seeking help from your accountant is recommended. Below are the steps to complete the process:

Step 1: Enter a vendor credit. This makes sure the credit hits the expense account you use for this vendor.

1. Click the + New button, then select Vendor credit.
2. Select the vendor from the drop-down.
3. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.
4. Hit Save and close.

Step 2: Deposit the money you got from the refund.

1. Click the + New button, then select Bank Deposit.
2. Select the bank account where you got the refund.
3. In the Add funds to this deposit section, fill out the following fields.
   1. Received from: Select the vendor who gave you a refund.
   2. Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   3. Payment method: Enter the method your vendor used to refund you.
   4. Amount: Enter the amount of your refund.
4. Select Save and close.

Step 3: Use Pay Bills to connect the bank deposit to the vendor credit. This last step is to keep your vendor expenses accurate.

1. Click the + New button, then select Pay Bills.
2. Select the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
3. Select Save and close.

The steps above will lead you to the right track. I'm also adding these articles to help guide you in preparing your 1099 in QuickBooks Online:

• Create and file 1099s using QuickBooks Online.
• What payments are excluded from a 1099-NEC and 1099-MISC?

Should you need any assistance managing refunds in QuickBooks Online, I'm available here to help any time!