Recording a Refund From a One-Time 1099 Supplier
If you get a refund from a one-time 1099 supplier, you need to record the refund in Payables so that the 1099 reports are accurate. If you were to enter a credit memo, it would never be used. Instead, you can enter a credit memo with the same 1099 information and expense account as the original invoice, and enter an invoice in the amount of the refund but without 1099 information. You can pay both at the same time with a zero-amount payment. The credit memo and invoice will account for the cash increase and will correctly update the 1099 data.
Prerequisite
To record a refund from a one-time 1099 supplier:
1. Enter a Standard type invoice in the amount of the refund. See: Entering Basic Invoices. Use Immediate payment terms. When you enter the distribution, use your cash account as the expense account. Do not enter an Income Tax Type or Region.
2. Enter a credit memo in the negative amount of the refund. For example, if the refund is $25, enter $<25>. Use Immediate payment terms. When you enter the distribution use the same expense account and Income Tax Type and Region as the original invoice.
3. Pay both invoices at the same time with a zero amount payment. See: Creating Zero-Amount Payments. The credit memo will update your 1099 report data, and the invoice will credit your cash account.
See Also
1099 Reporting Overview
The supplier is recorded as a 1099 supplier. See: Suppliers subject to income tax reporting requirements.