I have acquired a new client whose former bookkeeper did not report contract labor expense on last years return. Can it be reported this year? Thank you!

no;you need to file 1040X for the year that they apply to. Note; you have three years to make any corrections that result in additional tax refund. That's because there's a 3 year statute of limitations on issuing tax refund check. This three-year period is measured from the date you filed your original tax return. If you filed your return before Apr 15th, the 3 year period begins from Apr 15th; if you are beyond the 3 year period, you can only receive refund for overpaid taxes that were actually paid during the previous2 years.