What to do with all these 1099's

How do I claim the income on the 1099's I recieve?

Form 1099 is the reporting mechanism whereby the Internal Revenue Service is alerted to income paid to a vendor for services rendered. If you are receiving a Form 1099 it should only verify the income you have already booked in your income statements. This should not represent new income to be reported.

What are we to do with all of the 1099's we receive?

Do not ignore the 1099's you receive from your customers. These forms should be easily reconciled to your financial accounting system by customer. Remember, these forms represent what the government believes you have received in income, so underreporting must be fully documented

Reconciling these forms begins simply by agreeing that the Form 1099 amount is equal to the amount in your customer sales report. So long as the amount reported is equal to or less than the amount from your report you should be fine.

However, differences should be reconciled. Your customer may have accelerated a deduction for payment in one year in which you did not receive the funds until the next year. This is perfectly fine, but must be noted to avoid confusion with the Service should they come knocking.

Also, the hidden checkbook plays here. Creating gaps in payment sequences of checks would allow the payer to issue a check in January dated for December. If the reconciling difference is too great between what you show as income and what your customer shows as having been paid, you may have this as an issue and need to ask the customer to reconcile their report.

Remember the onus is on you to prove what you show is correct, not on the issuer!

Should this subject need further clarification, give us a call, we're here to help.

R. William E. Kruse III

"Happiness and moral duty are inseparably connected." George Washington

Hauk Kruse & Associates LLC
721 Emerson Road; Suite 120
Creve Coeur, MO 63141
314.993.4285 (w)
314.993.4288 (f)