topic On form 1099nec if the compensation includes material i purchased and was reimburse for how is that separated from income? in Get your taxes done using TurboTax

On form 1099nec if the compensation includes material i purchased and was reimburse for how is that separated from income?

cam10blk — Mon, 09 Mar 2026 05:11:31 GMT

on my 1099 in box 5 part of that was for materials how should the material portion be reported

Re: On form 1099nec if the compensation includes material i purchased and was reimburse for how i...

JohnW152 — Wed, 23 Feb 2022 13:11:15 GMT

Input this reimbursement this way:

Type Schedule C in the Search box
Select the Jump to Schedule C link
Answer Yes to Did you have any self-employment income or expenses? and answer the questions until you get the What kind of expenses did you have for XXX? screen. Select your expenses, then Continue
1. If you've already worked in this section, select Edit next to your business, then Add expenses for this work
Select Start next to an expense type that you had
Enter your expense description and amount, and answer any other questions asked
If you had more than one expense for a type, select Add another group to include them all
If you have additional expenses of other types, repeat steps 3 through 5 to add more

Are you certain you have the box 5 reference correct? That's typically "State tax withheld" on the 1099-NEC.

Re: On form 1099nec if the compensation includes material i purchased and was reimburse for how i...

cchan213 — Thu, 31 Mar 2022 00:32:49 GMT

Can you expand and give real life examples and what section that would best fit it? I'm in the same situation.

Examples:

1) Your client asks you for digital artwork and approves you to go online or in-person to buy graphics software. Say that software package is 1000$. Your invoice totals to 3000$ (2000$ for the work you performed and 1000$ for reimbursement for the software).

-----> Where would that reimbursement go or best placed in the Schedule C section?

2) Later in the year, the client wants more artwork done and also tells you to buy another copy of the graphics software so you can someone in-house can work together as the new art team.

-----> Is it better to enter "GRAPHICS SOFTWARE - 2000$" (for the 2 copies purchased within the year) or would it be better to enter each one "GRAPHICS SOFTWARE #1 - 1000$" and then "GRAPHICS SOFTWARE #2 - 1000$".

3) For those freelancers and consultants that buy a LOT of stuff for clients, do we painstakingly list out every purchase made in the Schedule C section?

Thanks

Re: On form 1099nec if the compensation includes material i purchased and was reimburse for how i...

FangxiaL — Thu, 31 Mar 2022 00:56:25 GMT

You don't list every purchase in TurboTax. You categorize all the expenses, such as advertising, computer software, etc.

1. In the example you gave, report $3,000 as gross receipts (income), deduct $1,000 as Graphics software. If you don't see any built-in categories, you can add them in the Miscellaneous expenses section. Provide a description of the expense and enter the amount.

2. Graphic software: $3,000

3. Categorize all your expenses and keep a good record of them. Save them for the IRS agents just in case you are audited.

Whatever you deduct on your Schedule C, make sure you can substantiate every one of the expenses.

@cchan213