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2020 1099-NEC includes 2021 income

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  • 2020 1099-NEC includes 2021 income

    I was issued a 1099 NEC that includes just over $11k in income that I didn’t receive until 1/6/2021.

    I contacted the company and asked them several times to correct it. Cited IRS pub 538 and constructive receipt. They refused because they issued the check on 12/31.

    This unexpected income in 2020 is an inconvenience in my tax planning. I was right around the phase out range for Sec 199A deductions and the 32% bracket. And I was hoping to get a 5k refund to put into ibonds. So I’m thinking about just “correcting” the 1099 myself. I guess my question is, is it worth the risk of an audit? Or are there other pitfalls with doing this?
    “Work” is a four letter word for good reason.

  • #2
    You're not bound by what the 1099 says. You follow the year you constructively received it even if the 1099 is wrong.

    It may generate a notice from the IRS and your response is that you didn't receive the income until 2021 and it is or will be reported in that year. You could include a copy of the deposited check to show it's dated 12/31 and then show your deposit of the check in 2021.

    The real issue is when you received the check, not when you deposited it, but showing when you deposited it at least gives some weight to your assertion that you didn't get it until 2021.

    This is a common issue and I'd report in 2021.

    And the issuer is correct to report it in 2020 because that's when they sent the payment.

    Comment


    • #3
      Originally posted by DavidGlennCPA View Post
      You're not bound by what the 1099 says. You follow the year you constructively received it even if the 1099 is wrong.

      It may generate a notice from the IRS and your response is that you didn't receive the income until 2021 and it is or will be reported in that year. You could include a copy of the deposited check to show it's dated 12/31 and then show your deposit of the check in 2021.

      The real issue is when you received the check, not when you deposited it, but showing when you deposited it at least gives some weight to your assertion that you didn't get it until 2021.

      This is a common issue and I'd report in 2021.

      And the issuer is correct to report it in 2020 because that's when they sent the payment.
      Appreciate your reply, it clears everything up!
      “Work” is a four letter word for good reason.

      Comment

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