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Setup Federal Withholding or Health Insurance Premiums for Subcontractors (1099 Vendors)

Setting up backup Federal or health insurance premium for 1099s.  Create a Federal or State withholding account or a health insurance premium when paying a subcontractor account and indicate the withholding on checks or bills created to paid the vendors.

Detailed instructions

Create and Map your 1099 accounts

  1. Create a new Other Current Liability account.
    1. From the QuickBooks Lists menu, select Chart of Accounts.
    2. Click Account and select New.
    3. Select Other Account Types, choose Other Current Liability and click Continue.
    4. Fill out the necessary fields and click Save & Close.
      Note: Name the account Backup Withholding for federal withholding or Subcontractor Health Insurance for health insurance premium collection.
  2. From the QuickBooks Edit menu, select Preferences and click Tax:1099.
  3. Under Company Preferences, click click here below If you want to map your accounts to boxes on the Form 1099-MISC option.
  4. Select Show all accounts from the drop down menu.
  5. Look for "Backup Withholding" (or Subcontractor Health Insurance if this is for health insurance premium collection) and select Box 4: Federal Tax Withheld.
  6. Look for the account that you used to track sub contractor payments and set it to Box 7: Nonemployee Compensation.
  7. Click Save & Close.

Write checks for vendors subject to federal withholding or health insurance premiums collections

  1. From the QuickBooks Banking menu, select Write Checks.
  2. Select the vendor and modify date is necessary.
  3. Under the Expense tab, first line, select the subcontractor expense account and enter the amount being paid to the subcontractor before withholding.
  4. On the second line, select the Federal Withholding or Subcontractor Health Insurance liability account that you created and enter a negative (-) amount for the amount being withheld.
  5. Click Save & Close. The correct withholding amount should appear in Box 4 and amount paid in Box 7.


Quick tip
  •  Employers using Write Checks to pay Internal Revenue Service (IRS) can indicate the Federal Withholding or Subcontractors Health Insurance account under Expenses. The balance that appears in Chart of Accounts is the amount to pay for Backup Withholding or Subcontractor Health Insurance.
  • The employer must file IRS Form 945 when paying backup withholding to IRS. At this time, QuickBooks Desktop does not create this form.


KB ID# HOW12885
4/27/2017 1:58:41 AM
QYPPRDQBKSWS08 9138 Pro 2017 db61f0