How do you deduct state withholding from a contractor

Hello, ljones7. 

I can assist you in setting up the 1099 form for your contractor in QuickBooks Online, which will help you deduct the withholding tax from your contractor's payments. This process will ensure that you comply with tax regulations and that your contractor's taxes are accurately deducted. Also, you may want to check when the IRS determines that payments to a contractor are subject to Federal Income Tax at a rate of 24% for reportable payments. Please refer to this article: What payments are subject to backup withholding?
 

Moreover, I'll guide you through the entire process, ensuring that everything is set up correctly, here's how:

1. Go to + New, then choose Check.
2. Select who to address the check from the Payee dropdown, too.
3. From the Bank Account ▼ dropdown, select the account you want the money to come from.
4. Fill out the rest of the fields accordingly. Ensure you add a line/expense to the check to account for the federal backup withholding.
5. (Optional) You can skip this step if you only want to record a check. But if you plan to print the check, you can choose to print it now or later.
   Note: If you need to reuse a check number, uncheck the Print later checkbox. When you save the check, confirm that the check number already exists.
   • Print now - Select Print check. If you choose this option, QuickBooks will save the check and redirect you to the Print Checks page.
   • Print later - Select the Print later checkbox. This option adds the check to the print queue, where you can enter the check number and print all your checks simultaneously.
6. Click Save and close.

For more detailed steps, you can refer to this article: Deduct federal backup withholding from contractors.

Please feel free to leave a message on this post with more questions. We're always here to assist you. Have a great day, and take care!