what if my employer sent a direct deposit in 2023 and my bank received it in 2024 .

[lazercal]

I am an independent contractor - my employer sent a direct deposit on December 29, 2023.  I have not yet received it.  Will the employer put the money on my 2023 1099 since it left its account in 2023 or does it go to 2024 since the money is not in my control until 2024?

[rjs]

If you are an independent contractor you are not an employee. The company that is paying you is your client, not your employer. You would have to ask them which year they are going to report the payment in. (It will probably be 2023, but ask.) On your 2023 tax return, report whatever amount they put on your 1099 for 2023.

[Opus 17]

If your client issued the payment in 2023, they may consider it a 2023 expense and put it on your 2023 form 1099-NEC.  However, if you don't receive the payment until 2024, you would (generally) consider it as 2024 income.

The easiest thing to do is report whatever the 1099 says.  Assuming your income is more or less similar year over year, this won't change your tax significantly in 2023 or 2024.  However, you would be permitted to ignore that income for 2023 (even though you get a 1099) and instead report the income in 2024 (even though it won't be on a 1099 for 2024).  If you want to do that, and aren't sure how to make the adjustment, write back here after you get the 1099 and are preparing your return.  

[ThomasM125]

It is true you don't need to report the income in 2023 if it was not available to you until 2024, as mentioned by @Opus 17 . If you choose to not pay tax on it in 2023 even though it is entered on a form 1099 NEC in that year, It would be best to report it as income in 2023 by entering the form 1099 NEC in TurboTax. That way it will match what is reported to the IRS. In this case, you can then enter a miscellaneous business expense  (called cash basis adjustment for instance) for the same amount of the receipt so the two will cancel themselves out on your business schedule C.

[kathy-102]

Hello. This is my situation also. We will receive a 1099 that includes about $6000 more than we actually received in 2023. If we want to save ourselves some taxes for 2023, how should I handle this when inputting income from clients in 2023? They all send 1099 forms. Thank you.

[kathy-102]

Thanks, then how do I enter that income next year on my 2024 taxes, since it won't be on the 1099?

[JudiCov]

I am in a similar situation and the extra amount is making a large difference in my tax due. How should I claim just what was received in 2023 for my 2023 taxes?

[DavidD66]

There is an option to enter income/receipts that were not reported on a 1099.  You will simply add the amount as a "cash receipt".  @kathy-102  

[DavidD66]

 @JudiCov Create a Miscellaneous Expense item for the amount that you did not receive in 2023.  

[JudiCov]

Won't I need to back up the expense with a receipt? And then how will I report the income for 2024? Thanks for the advice!

[VolvoGirl]

No.  Just call it Income not received until 2024.   Then enter it on your next year's return as General Income not received on a 1099NEC.

[Opus 17]

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@JudiCov wrote:

Won't I need to back up the expense with a receipt? And then how will I report the income for 2024? Thanks for the advice!

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You should always report your actual income and expenses from your own accurate records, even if you don't get tax paperwork from your customers or clients.  In 2024, just report the extra income.  For 2023, create an expense to offset the income.  If you are audited (unlikely) you can show by a PNL, bank statements or other records that even though the 1099 indicates payment in 2023, you did not receive the income until 2024. 

This is not an uncommon occurrence.  For example, if the client puts a check in the mailbox on December 31 (or starts and electronic transfer) and you don't receive it until January 3, it is a 2023 expense for them but 2024 income for you.   (However, if they mail a check on December 26, and it is delivered to your mailbox on December 30, but you don't check your mail until January, it is 2023 income for you because you constructively received it in 2023.)