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Hi from Just Answer. I'm PDtax, and can assist.
The cash payments are deductible, but it's your source of cash that is likely going to be the issue. And you know your subs aren't likely going to want the cash paid to them as part of their 1099.
If you use QuickBooks to record these payments, it's as if they got a check from you.
That's why most contractors who pay in cash don't record these payments in their accounting records they send to the tax preparer.
Most would keep a separate record of the cash paid, even going so far as to have the sub initial something to acknowledge receipt of there cash paid.
On your end, the cash paid is deductible, but the cash deposit side typically had to be added to your draw account or income in QB. Which creates a record in the software you won't want.
Owner draw records are audit targets. Single deposits to your draw can be explained, but regular deposits with corresponding payments out to subs is an IRS auditor's dream.
Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.
Then you can use QB and record those can payments as expense reimbursements if you do not include the cash in their 1099s. If you include the amounts in their 1099s then there is no issue.
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