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Old 04-14-2010, 06:38 PM
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Overreported income on 1099 MISC

I am an independent contractor. I invoiced a client for services in 2009, and they put a check in the mail on 12/31/09 that I didn't receive until the first week of 2010. They included the amount from that check in the income that they reported on the 1099 MISC to me. However, as I stated, I didn't get the money until 2010.

Am I still expected to claim this as 2009 income?



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Old 04-16-2010, 12:20 AM
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I called the IRS and was told that I could 1) have the client change the amount or I could, 2) Just report it as 2009 income, or 3) report the lesser amount. I chose option 3. I was told that, at some point in the future, I'll receive a notice from the IRS informing me that I underreported. At that point, I simply have to send a response indicating that I never got the money until 2010, and I use the Cash accounting method. Therefore, I'll claim it in 2010.



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Old 04-16-2010, 01:45 AM
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Actually, the correct procedure is to report the amount received from the 1099-Misc and then show an adjustment to income as "amount included in 1099-Misc but not received in 2009".

Thus, the gross income reported by the taxpayer would match the amount per the IRS records, and this in turn would not trigger an IRS notice or a potential audit! In this way, you are not paying taxes for amounts that you did not receive in 2009!

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Old 04-16-2010, 12:29 PM
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Unfortunately, that's not what the IRS told me to do (i.e. didn't mention that option), and I didn't get your response until today...had to file yesterday .



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Old 04-16-2010, 09:44 PM
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Thats ok, your approach is also acceptable, if IRS sends you a correspondence you can respond as mentioned earlier that you reported on a cash basis method of reporting!

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