Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-03-2010, 10:24 AM
Junior Member
 
Join Date: Feb 2010
Posts: 2
Timing of Income Received

I am a consultant and just received a 1099-MISC from my client. It is approximately $50,000 more than I was expecting, due to the fact that they sent three payments just before the end of the year (Checks were dated 12/30/09) that I received in January of 2010.

My question is, when is this payment considered received, when they printed the check or when I received it in the mail?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-03-2010, 12:04 PM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,417
Blog Entries: 3
The answer to your question is provided in the constructive receipt doctrine of the IRS. It states that income is reportable when you physically receive the payment or the check is delivered to you constructively, that is the check would be in your hand, but you have not deposited the check!

As far you are concerned, you should report the entire amount that is included in the 1099-Misc as total income received. But, you should also include a category of expense, called "income included in 1099-Misc but not received in 2009" and show the difference. This is because the check was not delivered to you prior to 12/31/09. That should be fine.

You would not have to pay tax on monies that you have not received in 2009! That would not be fair to you and the IRS recognizes this fact, a lot of IT companies and Corporations that use independent contractors have a practice of mailing checks on or before 12/31/09 to claim the deduction, and sometimes they even mail the checks after the 2nd of January of the following tax year! So, do not worry this is fairly common practice and the IRS will not penalize you for not claiming this income.

But, it is important to match the 1099-Misc income amount to your Schedule C gross income received or else it could trigger a Red Flag. The best practice is to match the 1099-Misc Income and then show an adjustment for the income not received in 2009.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 02-04-2010, 08:14 AM
Junior Member
 
Join Date: Feb 2010
Posts: 2
Thanki you for that very helpful, timely, and thorough answer!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Somewhat double tax:interest from trust investments? Timing on when realized? scarletsupra Trusts and Gift Tax Returns 0 05-29-2009 08:39 AM
What interest income received by a Taxpayer is subject to tax in South Carolina? TaxGuru South Carolina 0 10-15-2008 11:13 PM
Are proceeds received from the sale of inherited property considered taxable income? pinky Income 2 09-13-2007 01:30 PM
I haven' received my tax refund as of yet? Its been more than 6 wks what should I do? Tertard Income 1 05-27-2007 01:26 PM
I omitted some income from a 1099-Misc received in 2005, what should I do? awkan Miscellaneous 1 02-12-2007 07:51 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.