Please keep in mind I am not an accountant but this removed the non-taxable expenses from my contractor's 1099 report. I use QB Desktop (19)
Go to Lists > Chart of Accounts > Account (icon at bottom) > New
Choose Expense > Continue
Enter Account Name - I named mine EE Non-Taxable Reimbursement and entered mine into the sub-account of Independent Contractors, but keep in mind it might not be the same for you depending on how you're charting your contractors. I also add a description so future-me would know what to use it for.
Tax-Line Mapping - now here was the tricky part that I may have gotten wrong. I need the items to either not show up on a 1099 as taxable income or be put in Box 12: Code L (Non-Taxable Reimbursements for EE Business Expense) so it won't affect my contractors. I could not find ANYTHING after over an hour of research regarding what the tax line mapping items mean or how they reflect on a W-2 or 1099.
So.... I used UNASSIGNED - if you know the correct one PLEASE for the love of Pete let me know.
Regardless - this worked and removed the non-taxable expenses I had paid to the contractor. I re-ran their expected 1099 report for this year and the expected total was correct. I also want to note that the transactions re-itemized using the EE Non-Taxable Reimbursement were easily located in the Chart of Accounts, so if I screwed it all up at least it will be easy to locate to correct.
Also as a note - you will need to go back through every single invoice/bill made to the contractor in question and re-assign the account it was under for ones you don't want recorded as taxable income. Meaning the invoice was originally under an account for office supplies and I changed it to the EE Non-Taxable one that I made.
ANYONE who knows what they are doing regarding this please correct me if I've done anything incorrectly.
