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Level 3
posted Apr 14, 2025 9:30:58 AM

Incurred business expense in 2024, reimbursed in 2025

I am self employed, use TT Deluxe to report income and expenses by cash method. In 2024 I took a business trip for which I incurred the expenses. My 2024 business income was greater than the trip expenses. The client reimbursed those expenses in 2025. Which should I do?: 1) Deduct the trip expenses from my 2024 income on my 2024 return, and then include the include the reimbursement with the rest of my 2025 income on the 2025 return; or 2) Say nothing on the 2024 return, and in 2025 deduct the expenses from my 2025 income since that was the year I received the reimbursement. Thanks!

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1 Replies
Expert Alumni
Apr 15, 2025 9:23:23 AM

Yes, option 1 is correct. Since you paid the expenses in 2024, you should report those business costs in that tax year. The reimbursement is business income, which you report in the tax year it was received.