reporting 2022 income received in 2023

[dapa1]

I am self-employed and file on a cash accounting basis.  I submitted my final invoice to a client in late December 2022, but did not receive payment until January 13, 2023.  My client sent me a 2022 1099-NEC that included the monies I received in 2023.  I want to file electronically, but also want to include a note to the IRS that I will be accounting for the income in my 2023 tax filing.  

Where/how in Turbo Tax can I include the appropriate note?

[Vanessa A]

You do not need to send a note to the IRS saying that you will account for the income in 2023.  Since you use the Cash Accounting Basis, you are accounting for this income appropriately.  

You do not need to enter the 1099-NEC on your return since you have your own records.  Just keep it with your records. 

[dapa1]

Thanks for the reply, Vanessa.  You replied "You do not need to enter the 1099-NEC on your return since you have your own record".  I still need to enter a dollar amount in TT for the 'adjusted', i.e. reduced, value for the 1099-NEC entry, correct?  It seems not doing so would automatically trigger an IRS computer-generated notice to me showing a mis-match.  My client clearly has told the IRS a different, higher number than I will be reporting.

[JosephS1 · Accepted solution]

No, you may not need to adjust an amount before filing IF:  The total receipts reported on line 1 of your Schedule C exceeds the totals of all 1099-NEC's received.  If you are reporting more receipts than was reported to the IRS you are fine.  If the 1099-NEC(s) exceed the amount your own records indicated you received in 2022, you can list the difference in multiple places, whichever you prefer.

You can enter the difference as part of Returns and Allowances, but that does not provide a description for what the return or allowance is.  You can list the difference as an other miscellaneous expense with the caption "Income received in 2023 not subject to current taxation"  or "Error on Form 1099-NEC".

Those are just 2 examples.  Either one will do to equate the revenue to what you actually received.

@dapa1 

[dapa1]

Thanks, Joseph!