What should I put for accounting method on my 1099-misc?

No, the most common method is the Cash Method- reporting income in the year actually received it and reporting expenses in the year actually paid.

If you report income and expenses on your return as above, as the vast majority of taxpayers do, choose Cash.   

If I am on cash accounting and the company that pays me is accrual (or not), it causes a 1099-misc issue at the end of the year. the company pays $x on December 31 and reports it on the 1099-misc. I receive the check on January 6 and deposit accordingly. My records show the income in the new tax year. 

 

Legitimately we are both correct in filing in the respective years, however if  I do, it can/will raise a flag with the IRS, correct?

 

How is this handled in TT. in years past TT would ask if the amount entered is different from 1099 box 7. I dont see that any more.

 

 

Hi there, did you ever get an answer to this question?

 

Joe

You do not have to report income in the tax year (2021) if it was actually received in the next tax year (2022), regardless of the date on the check or deposit. Keep accurate records so that you will remember to include that income in the following year.  Keep the receipt/deposit records with your tax file should you need then later.

 

If your 1099-NEC/MISC includes the payment you can reduce that amount by one of two ways.  If you are a business reporting income on Schedule C, you can enter the income from the business without entering the actually 1099 form.  This will take care of the reporting the income in the appropriate tax year of 'constructive receipt' (IRS term).

• Constructive receipt. Income is constructively received when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations.

• IRS Publication 538

See the image below for the selection of the type of income.

 

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Thanks, based on reading Pub 538 last year I did elect to enter the 1099MISC and offset the amount in other income. Bottom line, the net amount is correct, and I can prove it.

 

Although the answer came 1 year later I appreciate you taking the time to respond.