question about incorrect 1099-misc income

Forum|Forum|1 year ago
February 10, 2025
1 reply
62 views

I work for a small company and my income is reported on 1099-misc. Late in 2024 the company had cash flow problems and I didn't get paid for a couple months salary. In January I adjusted my estimated tax withholdings to reflect the lower income for the year, and they issued me a 1099 to reflect the actual amount I was paid for 2024. A few weeks later they paid me for the missing months, but now they've issued a new 2024 1099 with that income included, even though it wasn't paid until Feb 2025. If I file with that income, I'll probably get penalized for under-withholding. So my question is, can the company put income on a 2024 1099 form that wasn't paid until 2025? And, if so, is there a way to explain to the IRS that my estimated taxes were done in good faith, but the company added income after the fact and after the deadline for 2024 estimated taxes, to avoid being penalized?

Not A Product Question

KrisD15

Level 15

No, the company that issued the 2024 1099-MISC cannot report income that was not paid until 2025.

If this was work you did as a sub-contractor, they should have used Form 1099-NEC, but no matter.

You may not have a penalty depending on your tax liability last year, however if you have documentation to prove that the funds were not made available to you before January 1, 2025, you could enter the 1099-MISC/1099-NEC and then make a miscellaneous expenses for the amount that was not received until 2025.

Name it something like "2025 payment on 2024 1099" to make it clear to the IRS.

Next year be sure to include that same amount as income and again name it "2025 payment on 2024 1099" as the description of the income.

IRS link When is income recognized

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douginsdAuthor

Level 2

thanks for the reply, and you're right it was on form 1099-NEC. I didn't have the form in front of me at the time and for some reason I thought it was 1099-misc.