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Old 04-05-2010, 09:29 PM
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Exclamation 1099-MISC Cash vs Accrual Reporting

I was laid off in 2008 and was fortunate to find part-time work as an independent contractor in 2009 for several companies. It seems that the 2 companies for who I performed contractor services only use a "cash" method of accounting:
  • COMPANY #1: For work I did from 9/1/09 - 10/31/09, COMPANY #1 didn't cut a check until 2010 (1/7/10).
  • COMPANY #2: For work I did from 12/10/2009 - 12/30/2009, I didn't submit until the invoice until 2010 (1/6/2010) and COMPANY #2 didn't cut me a check on 2/16/10 for my work in Dec 2009.
I'd prefer to use the "accrual" method for reporting my 2009 income instead of "cash" basis because I got a job in Jan 2010. Including the cash payments I received in 2010 for work I completed in 2009 will make my taxes in 2010 much higher.

A couple of questions:

1) Did the companies report my income correctly on my 1099-MISC? Meaning, do most companies only include the cash that physically paid that year rather than invoiced amount)?

If the cash method is standard...

2) Can I get the companies to change the 1099-MISC to reflect what I earned 2009 rather than what they physically paid in 2009?

If they won't change the 1099-MISC

3) How do I report my income using an accrual basis? Include the actual amount from Box 7 of the 1099-MISC and report the remaining income in "other expenses" and write a note to the IRS?

If I use the accrual method...

4) Will this cause more headaches than it's worth? Should I just plan on receiving my 1099s for next year and start saving for the big self-employment tax hit?

I don't plan on being an independent contractor any longer and I'm not a 'real' business. I'd rather do my taxes on my own so any tax advice on this situation would be appreciated. THANKS!



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