1099 Received was for accrual method, I use cash method - How do I reconcile?

[Innocent92]

A client sent me a 1099-NEC for 12 monthly invoices for year 2023.  However, I actually received 2 payments from 2022 and 10 payments from 2023 in year 2023.  The last 2 invoices from 2023 were actually paid in 2024.

My method is to count income when I actually received it in 2023.

The 1099 issued counted income earned in 2023, but not necessarily received

How do I resolve this?  Do I ask the vendor for a new 1099?  Her accountant said that's the way she does it.

[DavidD66 · Accepted solution]

Report the 1099-NEC as received and then make an income adjustment for the difference between what was reported on the 1099-NEC and what you actually received.  For example, if the 1099-NEC was for $6,000 but you only received $5,200, add negative revenue of $(800) as a separate revenue item in the "General Income - Business Income not reported on other forms".   Be sure to add the same amount to 2024 income.  

[newby1]

Where can I enter this on TT Premier 2024?  Can't find this screen. 

Thank you!

[PatriciaV]

The easiest way to find any section of TurboTax Desktop is to use the Search box or Show Topics in the TurboTax header.

If you need to adjust the amount reported on the 1099-NEC, enter a second 1099 with a negative amount that results in the correct amount of income.

@newby1 
 

[newby1]

thanks, but how would I enter one if I don't have any info for the issuer, etc.

And wouldn't it be a red flag for auditing since there would be a mismatch between what is sent to the IRS by the issuer and what I report?

[RobertB4444]

If you don't have any info for the issuer you enter it as cash received.

The biggest issue for the IRS is a mis-match between the 1099s that you receive and the income that you report on your return.  If those match (or the income on your return is higher than the total of your 1099s) then you should be good to go.

And the adjustment that you make is a very normal adjustment.  Changing the income to reflect what you actually received is exactly what you are supposed to do.  And next year you will have to add income to make up for the amount that you are adjusting this year.

@newby1