Advance Deposit

[tchanmd]

I received an advance from my client for traveling expenses.  and I bill my client each month for traveling expenses.  It is subject to refund upon conclusion of my consulting engagement.  The client issued a 1099-NEC to me.  Should it be reported as taxable income?

Thanks!

Tom

[PatriciaV]

Yes, you should report the income from Form 1099-NEC. But also report the related travel expenses. The two entries should offset, but the IRS will look for that 1099-NEC income on your return.

Note that if you haven't billed for the total amount on 1099-NEC, you still report the entire amount. Next year you'll have more expenses than income for this activity.