1099/Constructive income

[Anonymous]

I received a 1099 from one of the organizations for whom I worked in 2019. We are paid between the 5th to 7th of each month for the prior month's work via direct deposit (i.e pay for May 1 through May 31 arrives between June 5th through 7th to a bank account). The employer sent a 1099 that included the income earned in December 2019 but not received until 1/7/2020. I did not have access to the funds until 1/7/20.  The employer sent a "pay stub" after the fact that says the pay date was 12/31/19 (unlike every other month of 2019 where the pay stub has the correct pay date in the month following the earnings) but they did not make the funds available until 2020. I am assuing that under the "constructive receipt" theory, I can't count the 1/7/20 funds as part of my 2019 income since they were not in any way available to me in 2019. The fact that the employer put a different date on the pay stub is irrelevant. Is this correct? I read publication 538 and that seems to be what it is saying. The employer should send an amended 1099 or I have to in some way account for it on my tax return.  I also spoke to an IRS agent today who said that the income has to be reported in the year when it was contructively received. I just want to make sure my taxes are accurate!

[VictoriaD75 · Accepted solution]

You are correct. The income should be reported in the year received. If the company did not make payment until 2020, they should not be deducting the expense in 2019. They should issue you a corrected 1099. In the event that they do not wish to do so, you would report only the income received in 2019 on your tax return.