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Payment/reimbursement Taxes

April 14, 2011 06:01PM
Quick question on this subject, which I have obviously deferred from addressing as long as I can! :-)

I keep two columns for payments, one reflecting the base pay, and one to reflect a complete total, should reimbursements be involved.

So, using a $20 shop with an 11.10 reimbursement as example, do I report the income as $31.10, (and then claim the $11.10 as an expense), or do I just report the base amount of $20?

On another note, if anyone with a mac knows how to detect merged cells and correct that, help would be appreciated! (It won't let me sort the data, and I can't find any merged cells.)
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More About Reimbursements
April 14, 2011 06:32PM
My gut reaction is that there are two ways to do it and the only encouragement would be to do it the same way year after year.

1) and probably the most technically correct, would be to just claim the fees and be silent on the reimbursements. This should align nicely with any 1099s you receive, but not with your receipts, so could require explanation in case of an audit.

2) and my method of choice, would be to claim every cent received and then deduct out the reimbursements as an expense. This will not align with 1099s as they will be an understatement of what I am claiming as earnings, but it will align with my receipts. I like this method as I simply create a line in the miscellaneous expenses called something like "Reimbursed expenses claimed as income" with the total of the reimbursements. That also opens the door for a line called something like "Unreimbursed expenses" to handle flat fee shops.

I like method 2 because it yields a larger 'top line' for my business with no net effect to the 'bottom line.
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April 14, 2011 07:14PM
Most of my 1099s include allowances for travel, so I really have to use the "declare it all and then claim expenses" method. If you have even on 1099 that has included reimbursments, you may have to do it this way for all of your inclome.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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September 16, 2011 12:56AM
Chances are very good that if you get a 1099 they will treat the partial reimbursement as a bonus rather than as a 'reimbursement'. Of course if they don't send you a 1099 you won't know how they treated it on their books.
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