Tax question about reimbursable expenses and how shown on a 1099.?

Question

The question is: I am an independent contractor for a company that just issued me a PO to do work for them. As part of the contract, I will incur large reimbursable expenses back to the company (tens of thousands of dollars). The company says that they will put those reimbursable expenses on my 1099 shown as income. I guess I then deduct them from my income at the end of the year? Does this sound right or will this cause potential problems with the IRS?

Answer 1

They are correct. They must report all monies paid to you on your 1099. You keep track of all of your expenses and they are deductible on your Schedule C (I assume you are an individual). This type of expense will be deducted as a cost of goods deduction (above the line deduction) This get you to your "gross income". Your other types of business expenses will be deducted from this, leading to your "net income from business".

Answer 2

This is an acceptable way for you to be paid and will not cause a problem with the IRS. All your payments, including expenses that you were reimbursed for, will appear on the 1099.

Then, you deduct all those expenses on Schedule C. So even though the payor may not require documentation of your expenses, you must keep those records so that you can deduct them off the 1099 amount.

Answer 3

Every payment you receive from them will be considered revenues to you, and they're correct to issue a 1099 with the total.

You, then need to deduct out all business-related expenses, including those items they're reimbursing you for.

Answer 4

It's just part of your income from them. You'll account for the expenses on Schedule C or C-EZ.

Answer 5

no