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

Forum|Forum|5 years ago
January 23, 2021
2 replies
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What category should I use?

QuickBooks Online

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!

Rustler

Level 15

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

U

userjorgeAuthor

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

RenjolynCAnswer

Level 9

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!

I

Irene R

QuickBooks Team

Welcome to the Community, WA12. This thread covers how to record a holiday gift card for a contractor as part of their total compensation in QuickBooks Online.

For QuickBooks Desktop, start by creating a dedicated expense account for tracking the gift. Here's how:

Go to the Lists menu, then select Chart of Accounts.
Click the Account ▼dropdown, choose New.
Select Expense as the account type, then click Continue.
Fill out the account details.
Once done, click Save & Close.

Next, write a check to the contractor affecting this expense account. Be sure to include it in the 1099 mapping so the gift is reflected in their total compensation.

This discussion remains open if you have any additional questions.

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