Employers issue form W-2. Why does your customer refuse to correct the 1099-MISC?
Is box 7 too much or too little? If it’s too much are they including expenses they reimbursed you for? Or did they pay you the difference in another year?
it's way too much. They never paid me anywhere near that much.
when they were contacted, they said their accountant was out of town and then blocked me and are not returning my calls.
First I would send them a registered letter to request they correct the 1099 and send proof of the payments they did make so they have the correct amount. If they absolutely refuse to correct the problem then your only choice is to report all the income they reported on the Sch C then in the miscellaneous expenses section you can enter the amount of the over payment under the heading " 1099 income error " so the falsely reported income is reversed ... and "in & out " type of entry ... then keep good records in case the IRS ever audits you.
If they included reimbursed expenses in box 7, that is the correct way to do it. You must report the entire amount as income. But then you take a deduction, on schedule C for the expenses you actually paid.
If you received an erroneous 1099-Misc, you have several choices:
1. Ideally, you get a corrected 1099-misc from the payer
2. Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
3. Report the 1099-misc amount on schedule C and take a deduction, for the difference in the actual amount and reported amount error, under other expenses, call it something like "erroneous 1099-Misc adjustment"
One common complaint is that the "employer" included reimbursed expenses on the 1099-Misc. Be advised that is correct way to do it. You report the entire amount as income and then deduct your expenses, on the the appropriate line(s), on Schedule C.
They cut the check on 12/31 but I didn't receive it until Jan 3rd. It is 2020 income so I want to report it in 2020.
As long as you use the cash accounting method (not accrual), then you would report the income in the year it is received regardless of when the work was performed or when the check was written by the payer.
Using TurboTax Online...how do you adjust the income on a 1099 if a portion was the invoice dated 12.31.19 but money wasn't received until 1/15/20 and I use cash accounting? I don't see how to subtract that last payment..only where to report it on box 7. Thanks!
You would report the 1099 as received.
Then under expenses report under Miscellaneous Expenses a line item for Income received in 2020
Enter the amount of the pay received in 2020
Next year remember to add it in to the 1099 you receive.
Thanks, now that I have seen the same answer /response from several experts I will be reporting the exact 1099-misc amount and take Business Deduction for the offset.
Some 'experts' say that if you do this you should Not e-file and send proof of difference. Thoughts?
Another way to handle this reporting is in the Less Common Situations. To enter in TurboTax, follow these steps:
To declare this income as Other Common Income from Form 1099-MISC:
Secondly, in this scenario, to be in compliance with the IRS and report the Form 1099-MISC you received, you need to report it as "an in and out." Do this:
If this is your scenario, the instructions above will prevent the overstated income from being included in 2019 income
If you did have expenses that were reimbursed, those expenses can offset the income, as @Hal_Al mentioned