I have a S-Corp and performed work in 2017 for a builder. I invoiced them in 2017 and the invoice was reported in my 2017 taxes under the "accrual" method of accounting. The company paid out in 2018 and sent a 1099-MISC to my company. How do I go about properly reporting this on my current taxes?
Accrual basis taxpayers report their income when they perform services, regardless of when they receive their payment or compensation for their services.
Since you've reported the income in 2017 but the 1099 says 2018, report it, then show the IRS that you've backed it out. An example:
2018 Income: $50,000 (including 1099's of $10,000 reported in 2017)
2017 1099's -$10,000
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2018 Net Income: $40,000
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Accrual basis taxpayers report their income when they perform services, regardless of when they receive their payment or compensation for their services.
Since you've reported the income in 2017 but the 1099 says 2018, report it, then show the IRS that you've backed it out. An example:
2018 Income: $50,000 (including 1099's of $10,000 reported in 2017)
2017 1099's -$10,000
-------------------
2018 Net Income: $40,000
===========
@TurboTaxCherylW, My assumption is that I report it under 1099-misc on business income, but as a negative. Is that correct? Or do I report the 1099-misc elsewhere?
Yes, actually put it on a separate line, as above. There may be some question as to why the payor is deducting it in 2018, why aren't they seeing it in your company's taxable income. This way you will show them. Report it in your total business income, then show a negative for that amount so it zeroes out.