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1099 Income In Wrong Year

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Roger Fitzsimmons

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Feb 9, 2024, 4:32:16 PMFeb 9
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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?

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Stuart O. Bronstein

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Feb 9, 2024, 5:12:36 PMFeb 9
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Roger Fitzsimmons <donts...@redtopbg.com> wrote:

> 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?

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.

--
Stu
http://DownToEarthLawyer.com

Adam H. Kerman

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Feb 9, 2024, 5:32:46 PMFeb 9
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Roger Fitzsimmons <donts...@redtopbg.com> wrote:

>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.

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

>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?

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.

Roger Fitzsimmons

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Feb 9, 2024, 5:32:46 PMFeb 9
to
I am a cash basis taxpayer and I know I don't have constructive receipt and hence taxability until I receive the check. I didn't save the envelope but my client contact emailed me a copy of the check on January 17 and she wrote "1-17-24" on the top of the remittance advice. And of course I have the documentation of when I deposited it. The factual case is very strong and I'm not taxable on it until 2024.

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.

Bob Sandler

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Feb 10, 2024, 8:06:56 PMFeb 10
to
>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?

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
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