Discussion:1099 Question and Cash Basis TP
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Www.cpa1.biz (talk|edits) said: | 20 June 2007 |
| Almanacers,
I am questioning an 1099-MISC independant contractor's payment. When a IC gets a 1099-MISC, it shows the payments paid from that client of the IC. Question I have is this payment on an accrual or cash basis? If the customer of the IC is on a accrual basis and shows that he has an expense to the IC at year end but does not pay it until the next year, will that customer of the IC send off a 1099-MISC for the year end showing his payable amount to the IC? So basically the IC gets a 1099-MISC for money he has not received yet and if he is on a cash basis, he should not have to report this. Has this happened to any of you all or by sending a 1099-MISC show ACTUAL cash payments and shoul not show Accrued expenses... | |
| 20 June 2007 | |
| 1099's are supposed to be cash basis like W-2's. A cash basis taxpayer does not have to pay tax on income just because it is on an incorrect accrual basis 1099. I just make sure to total gross receipts on schedule C/E is at least as much as the 1099s. If the 1099s total more than the cash receipts I just back out the difference. | |
Www.cpa1.biz (talk|edits) said: | 20 June 2007 |
| Thanks Tony,
I guess you back out the difference to what the invoices show as outstanding to make your reconcilition. As of 1099s suppose to be on the cash basis, thanks for the heads up. You have any guidance on this? Thanks, Bj | |
| 20 June 2007 | |
| Brian:
I worked on a recent client that wrote loan payments for Nov and Dec 2005 but didn't mail until Jan 2006 (8 of 25 loans). What fun I had trying to reconcile payments to 1098 interest. Gave up and requested loan history. | |
| 20 June 2007 | |
| From the front page of the 2007 1099 Misc instructions.
"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year" | |
| June 20, 2007 | |
| And received the same way we should note. So if the last payment is mailed 12/31, obviously your client can't receive it. Up to him whether he just wants to report the 1099 amount or make a reconciliation and explanation. Or if there's lots of other non-1099 income, it's totally irrelevant. | |
