1099-misc reporting of reimbursed expenses

I hate to answer a question with a question, but why would reimbursed expenses ever go on a 1099-MISC? The1099-MISC is typically issued for services provided by the individual receiving the 1099.

If a subcontractor is paid for an allowance (mileage, phone, computer) this is to be included in the total amount paid to them in box 7

https://www.proformative.com/articles/fact-or-fiction-5-form-1099-myths-debunked

1099's are intended for the payment of services of $600 or more. Therefore, the reimbursement of expenses should not be reported. As mentioned above, there should be an accountable plan, so that the payer properly picks up the reimbursed expenses. For example, if a contractor is paid for $600 for services, and $100 for expenses, an expense report should be turned over to the payer along with receipts, so that the payer properly picks up the $100 in expenses on its books. This payer will report $600 for contract services, and $100 in expenses. A 1099 will be issued for $600. The receiver will report $600 in income.

Sometimes this approach is not followed and a 1099 is issued for $700, which is for both the services and expenses. The payer will just report payment for services of $700, and issue a 1099 for such. The receiver of the $700 1099 will report this income and then take the $100 expenses against it on his return. The net result is the same to both parties in either situation.

Joel S. Smith, MST, CPA, CMA
1701 N. California Boulevard, #79
Walnut Creek, CA 94596
T: 925-289-1160
F: 925-289-1163
[email protected]