A 1099-Misc includes reimbursement for my expenses; should I deduct the expenses first before filling out Box 7?

Hi commjo,

The 1099-MISC will need entered in full as Business income and then you can deduct all related business expenses.  This will produce a net income on which your self-employment tax will be calculated.  You can't net it from the beginning because the IRS is going to receive a copy of the original and be looking for that amount to be reported as gross.  Hope this helps!

Thank you for using TurboTax!

Thanks TurboTaxAimeeC, that's what I didn't understand!  Hopefully this will also answer other individual contractor's question on this.

Great but in which category of business expense would I list construction materials?

Sure wish I looked at this BEFORE filing my 2013 taxes.  Sigh.  Now I guess I have to amend the return.  I appreciate the answer though!

But when you enter the expenses, the tax burden does not lessen dollar for dollar . . . and the payments were not income they were reimbursements.  How do you capture it all back?

I have the same thought as StinkyPrincess. Also, the instructions for form 1099-MISC say that box 7 income can include "a fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600." I understand most of that, but what the heck does "account to the payer" mean? That the expense wasn't in the name of someone at that company?

You enter it as Turbo Tax Aimee said above.  It certainly will change the tax due on it.  You enter the full amount including the reimbursements on the 1099Misc as income and then enter all the expenses including the things you paid for that were reimbursed.  Materials would usually be entered under supplies.  Or you can enter the expenses under Other Expenses.  Then you only pay income tax and self employment tax on the NET Profit on schedule C.

Just entered the expenses & income, and it balances out. Thanks @VolvoGirl !

I saw another site suggesting that if you do work for somebody that includes many reimbursable expenses, then you can submit two invoices to them - one for payment for services (1099-able) and one for reimbursement (not taxable).   That way they can leave the reimbursement off your 1099.  But pretty big favor to ask of a client.  So guess I am going back and separating out reimbursed  mileage and expenses so I can deduct them.

I have the same issue. I noticed on my taxes it only allows for 50% deduction of some expenses.  How did you  get a dollar for dollar balance? Gina Parmesan?

@rtaylor1995 I put the full amount from the 1099 into the Income section, and put the relevant expenses in the Misc Expenses section. If I remember right, it "balances out" because it was the same net outcome as I got by excluding both the reimbursement and the expense—and most importantly, it matches the IRS forms. All my reimbursed expenses are 100% deductible though. I pay for my own food when I travel.

My 1099 includes reimbursement for expenses, but I gave all original receipts to my employer per his request. What is the procedure for claiming expenses, since I have no proof of those expenses beyond some informal e-mails or a credit card statement?

Can you ask him for copies?  Guess you should have kept your own copies first.

Good point. It wasn't clear beforehand that the 1099 would include or not include reimbursements and this is the first time I've had to deal with 1099s. Lesson learned for the future I guess!

I want 100% credit for $9000 in fuel. I was reimbursed but 1099 shows it as income. How do I get the 100% credit on schedule C

This would be classified as actual expenses when you report out your car and truck expenses in your Turbo Tax return. Just an FYI, if you have claimed mileage in previous years for your car and truck expense, you will not be able to claim actual expenses this year.