My client uses Accrual basis accounting and I use Cash basis. The 1099 they issued is larger than what I deposited (from them) in 2017 -- how would I resolve this?

[sethaugustus]

One of my clients uses Accrual basis accounting, and I use Cash basis accounting. Consequently, they issued me a 1099-MISC with a larger amount than I actually received from them during 2017. 

Since I have to enter all my 1099s (in the income section), how do I exclude the amount that I did not deposit during 2017?  i.e., so it doesn't conflict with my declared income for 2017.  Thanks

e.g., hypothetically, if they issued me a 1099-misc for $1,000 and I only received and deposited $500 during the 2017 calendar year, how would I handle this in Turbotax.

[KittyM]

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.

[sethaugustus]

Hello TurboTaxKitty, Thanks for the reply.  I get the idea, but I'm still unsure about exactly what to do in TurboTax.  The only 'Other Income' check box I see is after I click the 'Add income for this work' button and then there are 4 radio buttons, one of which is 'Other self-employed income. Includes 1099-K, cash, and checks.'  Is that that what you're referring to -- or -- do I need to add information on the *same* 1099-misc that needs to be adjusted.  If so, where would that go?  Thanks again!

[KittyM]

Yes, "Other self-employed income. Includes 1099-K, cash, and checks" is where you will enter the negative cash amount.

[sethaugustus]

Thanks!

[Mel47]

I have this exact problem, but I don't see where to enter an explanation -- only a negative number.

I went to "Enter Business Income That's Not on a 1099-Misc" and entered the negative amount under "Other Income".  Where do I enter the explanation?

[VolvoGirl]

I disagree with this.  The IRS will be expecting your schedule C gross income to be as much or more than all the 1099Misc reported.  You should make an offsetting entry under Other Misc Expenses for Income not received until next year.  And be sure to enter it on your next year's return as General Income not received on a 1099Misc.