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January 4, 2020
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1099 Contractor Expense Reimbursements

  • January 4, 2020
  • 3 replies
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My 1099 contractor submits bills for expenses and hours separately to me. Should I record each transaction in the appropriate expense category and issue a 1099 for the whole amount for the contractor to take care of deducting expenses on their own or should I be treating the two types of transactions differetly? I would appreciate any help with this. Thanks!

Best answer by Rustler

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The crux of the matter is who has the expense receipts - if you get them, then you are reimbursing the expense and it is not 1099 reportable.

 

if the contractor keeps them as his expenses, then the whole amount you pay him is 1099 reportable

3 replies

Rustler
RustlerAnswer
January 4, 2020

This subject can start discussions

 

The crux of the matter is who has the expense receipts - if you get them, then you are reimbursing the expense and it is not 1099 reportable.

 

if the contractor keeps them as his expenses, then the whole amount you pay him is 1099 reportable

    D
    Darshane
    July 10, 2020

    How do I record a non-taxable reimbursement for a contractor? I do not use Quickbooks Payroll.

     

    I understand properly recording the taxable 1099 wages, but I don't know how to record non-taxable reimbursement items. In example - I have an 1099 Independent Contractor, who earned $15k but their 1099 states an taxable income of $18k. The $3k difference is a non-taxable payment as it was an reimbursement.

     

      S
      ShiellaGraceA
      July 10, 2020

      Thanks for dropping by the Community, @Darshane.

       

      You can create a new expense account for your non-taxable reimbursement. Let me walk you through how.

       

      1. Go to Accounting, then Chart of Accounts.
      2. Select New. Then, choose "Expenses" or "Other expense" as Account Type and enter the Account details.
      3. Click Save and Close.

      After that, record the reimbursement using that account.

      1. Go to +New, then Check.
      2. Look for the account you've just created under Category column, enter other information on the field.
      3. Click Save and close.

      With these steps, you'll be about to record the reimbursement without including it on the 1099 mapping. You can learn about the different pay methods for contractors at this link: Pay Methods For Employees Or Contractors.

       

      I've also added these links below that I'm sure you'll find helpful. These resources will guide you on providing services to your contractor.

      That'll do it. Feel welcome to come by anytime if you have other questions or concerns. We're always here to help you every step of the way. Have a great weekend.

      T
      tg2020
      July 14, 2020

      can you please elaborate on this? what expense account do i add?

      i have a contractor who does work for me but buys supplies with his own cc. he submits invoices to me with labor and supply costs. i'm not sure how to enter it into QB so that the labor reimbursements don't appear as income on the 1099 form. or should they? 

      is it his responsibility to deduct them? 

        L
        lshulda41
        January 28, 2023

        I am finding the best approach for our small business is to have either (1) a Consulting/Contract Labor Account Category that would be tied to 1099 and then all your labor for services paid would be assigned to this account for all your outside contractors and then any reimbursable expenses submitted would go to regular accounts like supplies that are not taxable or (2) create two accounts that are similar but one is taxable and one is not:  For example, we pay contractors for helping with advertising but I also need to reimburse the owner for advertising costs (Google Ads) he paid on his own.  I create an Advertising & Marketing - taxable account that is tied to 1099 and an Advertising & Marketing - non taxable account for reimbursements.  This is only if you really want to see total cost of Advertising & Marketing on your P&L.  Quickbooks does not allow you to adjust the 1099 taxable piece at the transaction level but only at the global account category level, which is what is causing lots of headaches for preparing 1099's.

         

        Quickbooks should add this as a feature to assign a default 1099 status to an account but allow the user to "uncheck" the 1099 "taxable-ness" at the transaction level by vendor so we could uncheck reimbursable expenses for a particular expense...but doesn't exist in QB Online right now.

         

        My thoughts & two cents - FWIW 

        Adrian_A
        Adrian_A
        January 29, 2023

        Hi there, lshulda41.

         

        I appreciate you for sharing ideas. To ensure your suggestion reaches our developer's team, I'd suggest sharing it through the Send Feedback Online option.

         

        Let me guide you with these steps:

         

        1. Click the Help menu.
        2. Hit Send Feedback Online.
        3. SelectProduct Suggestion.
        4. Enter your feedback suggestion.
        5. Click the Send Feedback button.

         

        Check out these articles below on how to modify items and 1099 frequently asked questions in QuickBooks:

         

         

        You can always post anytime you need help. Keep safe!

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