@mgc6288 wrote:
Correct. My gut instinct is to add the sum of all payments and reimbursements for this lawyer to Schedule E, line 10 and then 1099 this amount if over $600 which will be equivalent to my out of pocket portion. Then have my bank statements handy to explain to the IRS if I'm audited as to what the deposits were for.
This new law of the bank reporting all deposits over a few hundred bucks really is an overreach.
@Anonymous_
@Opus 17
There's nothing new about the $600 limit for 1099-NEC, that's been the law for at least 10 years.
I don't like the idea of putting the entire legal expense on line 10 unless you also include the conduit payments from the other parties as income, or as negative adjustments on line 10. I would rather see line 10 be only your share of the legal fees. You can still issue a 1099-NEC for the entire amount, it does not have to match your tax return. I think the ability of the IRS to "match" different forms and find inconsistencies is overrated, according to other discussions I have seen here on various topics. In the event the IRS does come back to you and ask why you issued a 1099 for $2000 when you only show $500 of expenses, you can explain the situation then.
