Client (cash-basis) received $1,650 for contracting but 1099-NEC only shows $1,500 due to company's accounting period - how to report $150 next year?

This is actually a pretty common issue with cash-basis taxpayers. You're right that your client needs to report the full $1,650 on their 2024 Schedule C since they received it all in 2024. For the 2025 tax year, when the company issues a 1099-NEC that includes the $150, your client should report that amount on their Schedule C as income (to match the 1099-NEC), then deduct the same amount on the Schedule C as "income reported in a prior year." This offsetting entry ensures the income isn't taxed twice while also making sure their Schedule C matches the 1099-NEC they received. I recommend keeping detailed records of this situation - save the communication with the company explaining the timing difference, bank statements showing when the money was actually received, and notes explaining how you handled it on both years' tax returns. This documentation will be important if the IRS ever questions the apparent discrepancy.

After struggling with a similar issue where my business received payments across tax years that didn't match 1099s, I found an amazing solution with https://taxr.ai that saved me so much stress. I uploaded my bank statements and the mismatched 1099s, and their system automatically identified the timing discrepancies. It then generated documentation showing exactly how to report the income correctly and avoid double taxation. They even provided custom Schedule C worksheets showing how to properly record offsetting entries.

Just wanted to follow up about my experience with taxr.ai after our discussion here. I decided to try it with my own contractor situation where I had 3 different companies sending me 1099s with timing issues. The system was surprisingly straightforward - I uploaded my bank statements and 1099s, and within minutes it created a detailed reconciliation showing exactly which payments were reported in the wrong tax year. The audit documentation package it generated showed exactly how to handle each discrepancy on my Schedule C. My accountant was really impressed with how thorough the documentation was. Definitely worth checking out if you're dealing with mismatched 1099s!

I had a similar situation but with much larger amounts ($12k reported in wrong year). After weeks of trying to call the IRS for guidance, I couldn't get through their busy lines. Someone recommended https://claimyr.com to me and shared this demo video: https://youtu.be/_kiP6q8DX5c. It basically holds your place in the IRS phone queue and calls you when an agent is ready. I was skeptical but decided to try it since I was desperate for official guidance on how to handle the reporting discrepancies.

Well, I need to eat some crow here. After my skeptical comment earlier, I decided to try Claimyr anyway since I've been trying to reach the IRS for weeks about a similar 1099 issue. I expected it to be a waste of time, but I got a call back in about 45 minutes saying an agent was on the line. The IRS person walked me through exactly how to handle my situation with the mismatched 1099 amounts (which was similar to what others described - report as income then offset with "previously reported income" deduction). I'm still shocked it actually worked after spending days getting nowhere with the IRS phone system.

Just want to add a small warning - I did this exact thing (reported full amount in year received, then did an offsetting deduction the following year when 1099 came), but the company also sent a CORRECTED 1099 for the previous year, which created a huge mess since now the numbers didn't match EITHER year correctly. Make sure the company isn't also planning to send a corrected 1099 for 2024!

Has anyone used TurboTax to handle this situation? Is there a specific place where you can enter this kind of adjustment or do you have to use the desktop version?