On January 4, 2008, I received a check from a client dated 12/31/07. The client will include this amount on the 2007 1099 he files with the IRS. However, since I am on a calendar year accounting system, it is income I received in 2008.
Should I report it on my 2007 or 2008 taxes? And if on my 2008 taxes, will such a conflict with the amount on my 1099 and the amount on my Schedule C cause the IRS to question/audit me?
Thanks.
Janie
If you did not receive it until 2008 then for you it is 2008 income.
Just report it as received, and if the IRS should ever ask, tell then what happened.
Thanks, Art. I guess I'm a little afraid that the discrepancy will trigger an audit. Am I being needlessly paranoid?
Yes. If it were questioned, it would probably be a routine letter inquiry, easily answered as Art suggested. Don't sweat the small stuff.
In fact, unless you have major discrepancies, audits are not to be feared, based on small items like this.
Bill
Matter of fact, I have never seen a CP2000 letter on just such a situation, even for a schedule c filer.
ChEAr$, Harlan Lunsford, EA n LA
From my experience about the only time they even do a letter is if your 1099s add up to less than you stated on your taxes. In 20+ years of small bizzing, I can't think of a time that I actually got 1099s from all of my clients, probably reducing the audit possibility even further.
Thanks, Bill. I'll start worrying about other things now .
Don't you mean "more than"?
Seth
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