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1099 Income In Wrong Year

I do a consulting assignment once a year, and I submit my bill in late December because I want the income in the following year and I know it usually takes the client 4-5 weeks.

This year accounts payable cut the check on December 27, but I have proof that it wasn't mailed until around January 17. When I got my 1099-NEC, they included the payments I got in January 2023 and also this check.

I've written to the company and asked them to reissue the 1099. Is it likely they will do that?

Suppose they don't. Do I just file my taxes using the actual amount constructively received in 2023 and if IRS says "Hey wait your 1099's don't match up" just send them a copy of the email I got from the client (AP sends the check to my client contact who mails it out, and I have an email from her showing that she wrote "1-17-24" on the top of the payment advice) and say "I didn't get this money in 2023; I'll pay tax on it in 2024? Is this asking for other trouble?

Reply to
Roger Fitzsimmons
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If you're a cash basis taxpayer, there was no constructive receipt in

2023. There was actual receipt in 2024. They didn't even drop it in the mailbox until 2024 (don't you have a postmark?), so you're safe claiming it this year, not last year.
Reply to
Stuart O. Bronstein

What is the proof, the envelope cover? Was it a stamp with a clearly dated postmark? Save this with your records.

You can't predict whether there will be a need to correspond with IRS. You could attach an explanation to your Schedule C in both 2023 and

2024. Even if the payee hadn't delayed mailing the check till the following calendar year, your constructive receipt is after January 17.

That's when it's income to you.

Reply to
Adam H. Kerman

My question is whether IRS will give me a hard time if the client doesn't reissue the 1099. I don't know of anywhere in my tax software (I use FreeTaxUSA) to make a comment about the mismatch.

Last year I had a hassle with the state tax people because they apparently lost my estimated tax payment, and they did fix it once I sent them a copy of the cancelled check, but I'd still rather avoid as many problems as possible.

Reply to
Roger Fitzsimmons

The IRS instructions for Schedule C line 1 say the following.

"If the total amounts that were reported in box 1 of Forms

1099-NEC are more than the total you are reporting on line 1, attach a statement explaining the difference."

If you can't do that with your software, use different software or print your return and file it by mail, with the statement attached.

No explanation or statement will be needed for 2024. The IRS will not complain if the income you report is more than your 1099-NEC form for that year.

Bob Sandler

Reply to
Bob Sandler

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