Posted by Cris_AR on 2/6/06 10:13am
Msg #94677

1099-misc

Hi,
I have received a 1099 (2005) from a company that did not pay me until Jan 19th, I even have an email stating they would send the check on 18th.
They have sent me a 2005 1099, should be a 2006, the check is dated 12-31-2005.
Anyone else having this prblem?
I should claim it on 2006 income correct?
(My accountant is out of office and I want to know asap) TIA!

Reply by cmd_NH on 2/6/06 10:21am
Msg #94682

Re: 1099-misc...depends....

If you use the Accrual method for taxes....then you would count it as 2005 income as the job was done and billed in 2005.

If you use the Cash method for taxes....then you count it as 2006 income as you received it in 2006.

The Check was dated 12-31-05 so they can deduct the payment from their books in 2005.

Reply by eXpedN_TX on 2/6/06 10:45am
Msg #94703

Re: 1099-misc...depends....

Since I use the cash method, I would account for it with my 2006 taxes. With the cash method, you claim it as income the year you received it. You can read about this further by visiting irs.gov. I was confused about it as well a couple weeks ago.

Reply by Cris_AR on 2/6/06 12:16pm
Msg #94745

Re: 1099-misc...depends....

What gets me is they did not even get invoice until after New year.

Reply by Cris_AR on 2/6/06 12:15pm
Msg #94744

Re: 1099-misc...depends....

I billed the company Jan 2, 2006.
I think we use the cash method, recieved in 2006 so I am going to claim 2006.

Reply by Kurt Gross on 2/6/06 1:51pm
Msg #94765

Being a former accountant and IRS agent, I know just enough to get you in trouble, but what the heck, you asked, right?

First I should tell you, ALWAYS check with your accountant and don't go by what some stranger (like me) says, ok? Got it?

Now that I've qualified myself, to address your issue, it depends if you're on the "Cash Basis" or "Accrual Basis".

I would be surprisede if you're on the accrual basis, so first the cash basis is assumed. The rule has always been, it's when you RECEIVE the money is when you report it.

If you're on the accrual basis, it's when you earned the money.

The sender of this money most likely going to claim it in 2005, but that doesn't affect you. If they're on the accrual basis, they can claim it in 2005. Most likely they're on a cash basis yet are going to claim it in 2005 anyway. That's not accurate, but again, that's not your concern.

Don't forget, check with your accountant for your specific case. This was for entertainment purposes only. I hope you've enjoyed yourself!

Have a great year,

Kurt Gross
quixtar.com #909916

Reply by Cris_AR on 2/6/06 7:44pm
Msg #94865

Thanks so much, I am on cash, I invoiced after the 1st of the year, I received check around 19th, of course they dated the 31st (I just realized this). I do have an email from thier accountant on the 16th that checks went out that day. When I get ahold of my accountant I am sure he ill figure out what to do.
Again Thanks!