I sell Insurance. How do I report a chargeback in 2017 for 1099 income from 2016

Forum|Forum|7 years ago
June 6, 2019
3 replies
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I sell Insurance products and received a chargeback of $10,500 in 2017 for commission that I earned in 2016 and was reported on my 2016 1099. So, I paid tax on this money in 2016 but had to pay it back in 2017. The company said that they don't issue a 1099 for a negative number,

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DanielV01

Level 15

You deduct it as a business expense in 2017. This can appropriately be reported in the "Returns and allowances" section of the Schedule C (right underneath your gross income received), because a chargeback is a form of refund or return.

The reason why you report this in 2017 is that, if you use the cash basis accounting method (the most common accounting method), you count the acivity of what you received and what you spent within the same calendar year. Since the chargeback occurred in 2017, you report it in 2017, even though the income earned against the chargeback was earned in 2016.

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LanesiaJ

Level 2

So my question is very similar. If put it in the returns and allowances the same amount that was reported on 1099 for income does it cancel it out 100 percent?

LanesiaJ

Level 2

So my question is very similar. If put it in the returns and allowances the same amount that was reported on 1099 for income does it cancel it out 100 percent?