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

Setting up backup Federal or health insurance premium for 1099 s.  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 an account in the Chart of Accounts to enter the federal withholding or health insurance premium amounts:
Creating a Federal withholding account:
  1. Create an Other Current Liability account. Name the account "Backup Withholding."
  2. From the Edit menu, select Preferences.
  3. In the left column, select Tax: 1099.
  4. Click on the Company Preferences tab:
If you are using QuickBooks Desktop 2014 or newer, use the steps below:
  1. Click the click here link under  If you want to map your accounts to boxes on the Form 1099-MISC option.
  2. Select Show all accounts from the drop down menu.
  3. Scroll down to the "Backup Withholding” accounts and select Box 4: Federal Tax Withheld.
  4. Scroll down to the account you use to track payments to subcontractors. For example, "Subcontractor Expense."
  5. Click OK.


Note: For collecting a health insurance premium refer to step 1, but name the account “Subcontractor Health Insurance”.
Writing checks to vendors subject to Federal withholding
On the Expenses tab of the Write Checks window:
  1.  On the first line:
    1.  Click the drop-down arrow under Account, select the subcontractor expense account.
    2.  Enter the amount being paid to subcontractor before withholding.
  2.  On the second line, Click the drop-down arrow, select the Federal Withholding or Subcontractor Health Insurance liability account you created in Step 1.
    1. Enter a negative dollar amount for the amount being withheld.
Note: Withholding amounts will appear correct on previewing the 1099 form, the correct amount for withholding now appears in Box 4. The amount paid in Box 7 will be correct.
Employers using Write Checks to pay the Internal Revenue Service (IRS), can indicate the Federal Withholding or Subcontractors Health Insurance account under Expenses. In the Chart of Accounts, the balance appearing in Backup Withholding or Subcontractor Health Insurance as the amount to pay.
Note: The employer must file IRS Form 945 when paying backup withholding to the IRS. At this time, QuickBooks does not create this form.
KB ID# HOW12885
10/21/2016 2:03:53 AM
PPRDQSSWS404 9138 Pro 2017 ed6d37