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How do I include a small gift card given to a contractor as a holiday gift in their total compensation?

What category should I use?

Best answer by RenjolynC

I've got you covered, userjorge.

After creating the expense account and recording the transactions for your gift card, you can map the accounts by following these steps:

Go to Expenses > Vendors > Prepare 1099s.
Select the Continue your 1099s or Let’s get started button.
Go to the Accounts section and select the boxes that represent the type of payments made to all of your contractors this year, then hit Next. Important: There are changes to the 1099 forms and boxes in 2021 for tax year 2020, so choose your boxes carefully. Most businesses will choose “Nonemployee compensation (Box 1 1099-NEC)”, but check with your accountant if you think you might have made other types of payments.
Click Next until finish.

Please see this sample screenshot for a visual guide:

You can use this article as a reference: Create and file 1099s using QuickBooks Online. If you need help with other task in QuickBooks, you can visit our general help topics page to view the articles and guides.

Please keep me posted here if there's anything else you need with your QuickBooks Online account. I'm always here to help. Take care!

If the gift was less than $25 then it is not taxable, otherwise, create an expense account called gift expense and use that, and map it to the 1099

Thanks Rustler for your advice. How do I link it to the 1099s? We gave a $100 gift card to three contractors.

I've got you covered, userjorge.

After creating the expense account and recording the transactions for your gift card, you can map the accounts by following these steps:

Go to Expenses > Vendors > Prepare 1099s.
Select the Continue your 1099s or Let’s get started button.
Go to the Accounts section and select the boxes that represent the type of payments made to all of your contractors this year, then hit Next. Important: There are changes to the 1099 forms and boxes in 2021 for tax year 2020, so choose your boxes carefully. Most businesses will choose “Nonemployee compensation (Box 1 1099-NEC)”, but check with your accountant if you think you might have made other types of payments.
Click Next until finish.

Please see this sample screenshot for a visual guide:

You can use this article as a reference: Create and file 1099s using QuickBooks Online. If you need help with other task in QuickBooks, you can visit our general help topics page to view the articles and guides.

Please keep me posted here if there's anything else you need with your QuickBooks Online account. I'm always here to help. Take care!

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