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VANDT
November 9, 2021
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Accidental direct deposit received from client. How should it be categorized on Quickbooks Online?

  • November 9, 2021
  • 1 reply
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Our small business received a direct deposit payment from one of our existing clients that was not meant to be received by us. We suspect it was an accidental payment error on their end and that the money was supposed to go to a different business. After contacting the client we agreed to write them a check to refund the money. They have also assured us they will exclude this from our 1099 with them so that it doesn't look like we made more income than we actually did.

 

However our bank records show that we received income from this client on Quickbooks. Our records will also show that we wrote them a check for the same value. Is there a way to categorize these transactions in Quickbooks to show it was not truly income we earned from our client? And also a way to show we did not pay them for their services but it was simply a refund given for a mistake? 

 

Thank you!

Best answer by Rustler

Edit both transactions and use a clearing expense account for them both.

 

1099 payments are only calculated on the transactions that use the mapped expense account for the transaction.  So as long as the clearing expense account is not mapped to the 1099 it will not be reported

1 reply

Rustler
RustlerAnswer
November 10, 2021

Edit both transactions and use a clearing expense account for them both.

 

1099 payments are only calculated on the transactions that use the mapped expense account for the transaction.  So as long as the clearing expense account is not mapped to the 1099 it will not be reported

    V
    VANDTAuthor
    November 26, 2021

    I made a clearing account on Quickbooks online and matched the transactions to that account and it worked. Thanks!

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