1099-NEC

[Haden Roye]

I have a Sole Proprietor  LLC that does business with one large client. Per agreements with this client, all consumables for projects that my LLC pays for are billed back through an external agency. I received my 1099-NEC from one of the agency's that paid 24,000 in reimbursable this year but the 1099-NEC reads 0.00. Is this an error or should it read as 0.00? If the 1099-NEC should read as 0.00 should I still deduct the 24,000 I. consumables as expenses?

[DianeW777 · Accepted solution]

No, do not take the expense without reporting the income since you already know it was a reimbursement for the consumable supplies you purchased on your client's behalf.  

It would seem they shouldn't be issuing the 1099-NEC with a zero as an income amount for your LLC.  You have two options for your tax return.

1. Do not include the income. Keep the 1099-NEC with your tax return, as well as any proof showing your receipt submissions and payments from the external agency. Do not deduct the expense you were reimbursed for.
2. Add the $24,000 as income, then take the same expense. Keep the same records as noted in 1 above.

[Haden Roye]

This is great, thank you for the detailed answer. 

I will likely go with option 2 since all my expenses are together and not broken out by agency specific reimbursement. Leaving the 24k in income on my schedule c, would I include it in the location it initially was - under where the 1099-NEC would go for that agency? and if so should I include the details from the 1099-NEC such as the agency that paid me EIN number, name, etc.? or should I act as its from a unknown source who dint issue a 1099-NEC with not company details (EIN, Name, etc.)?

[Haden Roye]

Additionally, should I ask the agency to amend the 1099-NEC?

[RobertB4444]

You can do either.  Entering all of the 1099-NEC details lets you save it in your TurboTax account and you are entering it as the 1099 should have been.  

You can reach out to the agency to ask why they issued you a 1099 for zero dollars.  Clearly that would be an oversight on their part.

@Haden Roye