A client’s 1099 includes a check from 2017 we didn’t receive & deposit til 2018. What do we do for the IRS to reconcile the 1099 with our actual cash basis income?"

[iriscla]

Searching: "We have a business and operate on a cash basis. We have a client who cut a check to us on Dec 29 and mailed the check. We received and deposited the check in 2018. The client sent us a 1099 that included the 12-29-17 check but our 2017 income and quarterly deposit do not agree with the amount of the 1099 since the last check is not part of our 2017 income. We did not receive the 1099 until after our quarterly deposit. The client included the check in their 2017 expenses and will not change the 1099. 

[KittyM · Accepted solution]

Here's what you do:

After you enter your 1099-MISC, TurboTax will ask if you have any other additional income.  Say yes.  If you have already entered your 1099 and are coming back to the interview, just choose the second radio button "Additional income and other income...."  

Then enter an explanation such as "Income reported on 2017 Form 1099 but received in 2018" and enter as a NEGATIVE number.  (The minus sign goes in front, or the software will complain at you.)

This will correct your income and let the IRS know why you're doing it.