I'm self-employed. I paid for hotel but was reimbursed by the company in my pay. Do I claim these as an expense?

[Michelle140]

I submit an invoice each week. I pay for gas and hotels when I travel, which is every other week. Included in my invoice is travel time and hotel but as a separate line item. My 1099 is a lump sum of what they paid me. Do I claim my hotel stays as an expense? I originally didn't because I was reimbursed for my travel but then i started thinking. Im paying tax on the full amount even though part of the funds are reimbursing me for money I paid out. That isn't income! 🙂

[ChristinaS · Accepted solution]

If the 1099MISC you receive from this company reflects your reimbursements, then you deduct them. If its on the 1099MISC, you essentially received income. You used this income to then pay expenses.

The company is not treating any of these payments to you as reimbursements of valid expenses. It is simply giving you money. It is up to you to itemize the expenses on your tax return.

Alternatively, the company could have set up an accountable plan with you. With this approach, the company deducts the expenses in the appropriate categories on its return, and does not report the reimbursement to you. That puts the expense on their return, not yours.

As long as the reimbursement isn't an awkwardly large amount, I wouldn't worry about the 1099 being a lump sum.

The only possible drawback is meals and entertainment. You are limited to a deduction of 50%, whereas your lump sum may include 100% of it as income. If your employer reimbursed and didn't include in your income, that would be a tax savings.

Rules for Independent Contractors and Clients

[Michelle140]

Of the 55,000 on the 1099 lump sum amount, approximately 5200 was reimbursement for hotels. I didn't claim that expense when I filed last week. :( Should I file an amended return?

[ChristinaS]

Yes, you definitely should. $5200 is not a terribly large percentage of the total, but I would try to get them to not include on your 1099MISC if you do work in 2017. If you are submitting receipts and the amount reflects a true cost (not just an arbitrary allowance) then its better to not have the income hit your 1099misc/ return at all.

[Michelle140]

Ok thank you for your help!!! 🙂 Have a fantastic day!

[ChristinaS]

You're welcome, and you too!