No, that didn't solve the issue. The issue I have is I need to pay a 1099 contractor (only a contractor-not a customer).  The contractor borrowed money - an advance against from what I owe him.  I want to deduct the amount he owes me without under reporting on his 1099 next year.  For example I want to pay him $1200 and I want this amount to reflect on his 1099 next year and I also want to reduce his direct deposit to pay me back the $400 he was advanced, so his net would be $800. This can be done on the employee side but I can't figure out how to do this same type of transaction on the contractor side.  Thank you for you assistance.

-Erin Sullivan

 Accountant/CFO