I am currently in a Mississippi state tax audit. I am an independent contractor and my invoices list my labor, supply's used that are needing to be reimbursed and any sales tax if applicable. On line 1 or the Schedule C it lists to input Gross Sales. I calculate the total of all of my invoices to my clients and input it on line 1 (this amount includes the supply's that the client reimbursed me for). Then under other expenses in Part V, I list the total amount of the supply's that the clients reimbursed me. That way I do not get taxed on the supply's as income. Is this the correct way to do it?
