employer 1099'd me in 2006 for payment i'm getting in 2007. Is it income for 06 or 07?

Question

I have an employer who has said they "cut the check" for my business. I know I won't receive this until after January 1st as they have left town and won't be back until then. I am sure i will be 1099'd for this in 2006 - do I count this as 2006 income or 2007 when I receive it? Thanks!

My business is on a cash basis. the employer doesn't mail, but hands checks personally. It is a substansial amount ($26,000) that I will not be receiving until January. I just don't want to get audited. I have plenty of other small accounts that don't 1099 - so my 1099 income wont exceed my stated income. HR block did my taxes last year and didn't even want my 1099's - are they screwing up or am I by using them? Thanks

Answer 1

If you receive it in 2007 and you are on cash basis, then it is 2007 income. You will have to weigh the benefit of counting it in 2007 with the pain of having to argue with the IRS. If you receive 1099's for all your work this would be an issue. If you have more income in any case than is shown on all your 1099's the IRS are not going to notice.

Personally, I'd go with the 1099 figure, unless it is a big amount and make sure I didn't double count next year.

Answer 2

Based upon the limited information provided, this income should be 2007 income. However, if you actually receive the check in 2006, then it is 2006 income.

Since you stated that the check will not be received until 2007, this is what you need to do to substantiate your claim that this is 2007 income.

When the check arrives in the mail, make a at least two photcopies of the check and the side of the envelope with the postmark before you cash the check. It is best to photocopy these AT THE SAME TIME ON THE SAME PIECE OF PAPER. You will need this as proof that you did not actually receive the check until 2007. Having the postmark will support your position.

Also, when you file your 2006 taxes, you will need to attach a letter explaining why you are not including this as income for 2006, a photocopy of the 1099, and a photocopy of the envelope and the check. When you file this tax return, you should file a paper tax return and send it either certified or registered mail to have prooof of mailing.

This will not guarantee that you will not be audited, but it will help if the IRS decides to assess any additional taxes based upon the 1099 that was filed.

If you do receive a letter from the IRS asking about this, then you should have the necessary evidence to resolve this with a phone call rather than going through an audit.

When you file your 2007 taxes, you will basically need to do the same thing while explaining why you are including a 2006 1099 in your 2007 tax return. Do not just assume that the IRS will remember that you sent them a letter with your 2006 taxes.

Answer 3

You said they cut the check, but you won't receive it because they are out of town. Did they mail the check before they left? If they did, it counts for 2006 no matter when you actually receive it. If they already gave you a 1099, why didn't they give you the check at the same time? If they retain possession of the check until Jan 2007, it SHOULD be considered 2007 income. I don't know how to get them to correct the 1099.

Answer 4

If you receive a 1099 for it in 2006, you will need to report it as income in 2006.

Answer 5

Even though you receive it in 2007, if the check is dated 2006, then it's 2006 income.

Answer 6

The date on the check normally is how it's done. If you didn't get it because YOU were out of town, then there wouldn't be a question. But if they cut the check already, they should have mailed it out right away. If there's a long time in between cutting the check and mailing it, you hae a legitimate gripe but I don't really know how you can resolve it if they won't redo it.

Answer 7

you have to have the money in hand for it to apply to that year