How to Deduct, Track and Report Taxes Withheld for 1099

January is a busy month for businesses and Accountants preparing and filing 1099 forms. All QuickBooks users have to do a better job deducting and tracking taxes withheld on payments made to vendors. Here is one of the frequently asked question – how do I track subcontractors Federal and State withholding tax and accurately reflect them in QuickBooks when printing it on Misc 1099. Paul asked:

Are we sure that PADOR is even setup to credit the account of the vendors that we are withholding taxes for? Wanted to ask this question at the seminar with Dave Braden on February 6th, but I didn’t want to look too negative. LoL.

I really want to know how you are planning to handle this transaction. Assuming that most of our clients are using QuickBooks, I contacted them and they knew nothing about these new requirements for PA. I can tell you that QB is not setup to handle this type of transaction. Please walk me thru the process from getting a bill from the out-of-state vendor to accounting for the monies withheld to paying the liability to having those payments appear on the 1099 at the end of the year. It “ain’t” simple.

Let me make it simple for you. As you know setup in QuickBooks is very crucial but at the same time easy to track in 6 easy steps:

First – Create Accounts

You should create 2 accounts:

– From the Lists menu, Select Chart of Accounts
– Click on Account > New
– Create two Other Current Liability accounts
– — Federal Tax Withheld – 1099
– — State Tax Withheld – 1099

Second – Map vendor payment accounts

– From the Edit menu, select Preferences
– In the left column, select Tax: 1099
– Click the Company Preferences tab
– Click Yes on Do you file 1099 MISC forms?
– Click click here to map your accounts

Third – Map your vendor payment accounts

– Click on the drop down arrow and select the Box it should reflect on the 1099 form
– Click Save & Close

Fourth – Enter a bill or write a check

– Select the account for withholding tax
– Enter negative amount for the taxes withheld

Fifth – View and verify your report

– From the Vendors menu, select Print/E-file 1099s…
– Click 1099 Summary Report

Verify the amounts for each vendor

Sixth – Print or E-File your 1099 forms

– From the Edit menu, select Preferences
– In the left column, select Tax: 1099
– Click the Company Preferences tab
– Click click here to prepare your 1099s, including mapping accounts
– Get started to verify the details and Print or E-File your 1099 forms.

Take my advice E-File the forms, the best part is they will email and mail the forms for you. No more spending time stuffing and licking those envelopes!

Are you ready to file 2018 1099 forms? Below is a sample where all the numbers fall in place.

1099-8 Form

By |2018-02-09T18:13:25-05:00February 9th, 2018|1 Comment

About the Author:

With more than thirty years of experience in the real estate and property management industry, Gita Faust is more than just a real estate investor; she is also popular for her work as an accountant, consultant, mentor, speaker, QuickBooks Top ProAdvisor, QuickBooks Solution Provider, member of Intuit’s Trainer/Writer Network, and, of course, author. As the CEO and owner of Fast Trac Consulting, Gita is well-known for her exemplary leadership and advisory skills. In fact, she even helped pioneer the adaptation of QuickBooks to suit the needs of professionals in real estate and property management. To share her knowledge and experience with others, she has written a series of courses titled Simplified Accounting Solution, which provides step-by-step guidance for those working with QuickBooks.

One Comment

  1. Paul VanVreede February 9, 2018 at 8:07 pm - Reply

    Nice Gita. How do you get the State ID # into box 17?

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