Got a 1099-NEC while traveling for work as a W-2 employee - how to handle this?

I'm in a weird tax situation and hoping someone can help. I work full-time for Company A as a W-2 employee. Last year, Company B invited me to speak at their industry conference and I got permission from my employer to attend. While at the conference, Company A still paid my regular salary on my W-2, but Company B covered all my expenses directly (hotel, meals, transportation, parking) as reimbursements. They sent me a check for about $1,875 to cover everything. Now I just got a 1099-NEC from Company B in the mail for that same amount! I wasn't providing "services" to them - I was just getting reimbursed for actual travel expenses that I have receipts for. This shouldn't be taxable income, right? The 1099-NEC shows up as income on my 1040. I have all the documentation showing these were legitimate business expenses. What's the proper way to make this reimbursement non-taxable like it should be? Do I need to file a Schedule C to report these expenses, or is there another form I should use? I don't consider myself self-employed in any way, this was just a one-time speaking engagement while still employed by my main company.

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19 comments

Ayla Kumar

•8M

You've got a common but confusing situation here. The conference organizer (Company B) handled this incorrectly - they should have treated these as accountable plan reimbursements rather than issuing a 1099-NEC, but unfortunately many companies don't understand the distinction. Since they've issued the 1099-NEC, the IRS is expecting to see that income reported. The best approach is to report the income on Schedule C, then deduct the exact same expenses on that schedule. This creates a wash (zero net income) assuming your expenses exactly match the reimbursement amount. Make sure you have documentation for all expenses in case of an audit. Business travel expenses like transportation, lodging, and meals are legitimate business deductions when you're traveling away from home for business purposes, which a speaking engagement certainly qualifies as.

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Ayla Kumar

•8M

You won't owe self-employment tax if you report the income and offset it completely with the corresponding expenses on Schedule C, resulting in zero net profit. The IRS sees plenty of tax returns with both W-2 and small Schedule C activities - it's quite common for people to have side gigs or occasional independent contractor work alongside their main employment. If you're concerned about using Schedule C, another approach is to report the 1099-NEC income elsewhere (like "Other Income" on Schedule 1) and then deduct the expenses as unreimbursed employee expenses on Schedule A. However, under current tax law, unreimbursed employee expenses are only deductible if you itemize and only to the extent they exceed 2% of your AGI, which likely means you won't get the full deduction that way.

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Carmella Popescu

•8M

I dealt with this exact situation last year and found that taxr.ai was incredibly helpful for dealing with the 1099-NEC vs reimbursement issue. I was stressed about potentially paying taxes on what should have been non-taxable reimbursements when I got a surprise 1099-NEC. I uploaded my 1099-NEC and expense receipts to https://taxr.ai and their system analyzed everything and confirmed the proper approach was Schedule C reporting (income and equal expense). The tool actually walked me through exactly how to report this to ensure I wasn't overtaxed and even provided the specific expense categories for my documentation.

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Carmella Popescu

•8M

It's pretty straightforward - you just upload your tax documents and it uses AI to analyze them and provide guidance. It works alongside whatever tax software you're already using - it doesn't file for you, but gives you specific instructions on how to report things correctly in your existing software. Regarding privacy, I was initially concerned too, but they use encryption and don't store your documents permanently. The advice I got was actually more detailed than what my previous tax guy provided, especially for this specific 1099-NEC reimbursement situation which seemed to confuse even the professionals.

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Kai Santiago

•8M

Just wanted to follow up! I tried taxr.ai after seeing the recommendation here, and it was super helpful for my situation. I had both a W-2 and a 1099-NEC for some conference reimbursements (similar to the original poster). The tool confirmed I should report the 1099-NEC on Schedule C and then deduct all my documented expenses. It even helped me categorize which expenses went where on the form. Ended up with zero net income on the Schedule C which meant no self-employment tax. Saved me from overpaying about $400 in taxes on money that was just passing through! What I really liked was that it explained WHY this was the right approach rather than just telling me what to do. Definitely helped me understand this whole W-2 employee/occasional 1099 situation much better.

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Dananyl Lear

•8M

If you're still having issues figuring this out, I'd recommend calling the IRS directly to get clarification on how to handle this specific situation. I know calling the IRS sounds like a nightmare (it usually is), but I recently discovered a service called Claimyr that actually gets you through to a real human at the IRS without the typical 2+ hour wait. I had a similar issue with incorrect 1099 forms last tax season and was getting conflicting advice. Used https://claimyr.com and got connected to an IRS agent in about 15 minutes instead of waiting on hold forever. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly how to report reimbursed expenses that incorrectly showed up on a 1099 and gave me peace of mind that I was handling it correctly. Sometimes getting the answer straight from the source is worth it.

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Dananyl Lear

•8M

It's actually pretty clever how it works - they use an automated system that navigates the IRS phone tree and waits on hold for you. When a real IRS agent finally picks up, they call your phone and connect you. You're not cutting any lines - the service is just waiting in the queue so you don't have to. They don't get any access to your tax information at all. They're just connecting the call. Once you're talking to the IRS agent, it's a direct connection between you and the IRS - the service isn't involved in the actual conversation. I was skeptical too until I tried it and got through to an actual helpful IRS agent who walked me through exactly how to handle my misfiled 1099.

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Lim Wong

•8M

I need to apologize for being so skeptical earlier. I actually tried Claimyr after posting my doubtful comment, and I'm shocked to say it worked exactly as described. I've been trying to reach the IRS for THREE WEEKS about a similar 1099-NEC issue where I was misclassified. Got connected to an agent in about 20 minutes who confirmed that using Schedule C was indeed the right approach for reporting reimbursed expenses incorrectly issued on a 1099-NEC. They also explained that I should include a statement with my return explaining the situation. This saved me so much stress and potentially an audit. Sometimes being proven wrong is actually the best outcome! So to the original poster - calling the IRS directly might be worth it in this case since it's a bit of a gray area in how it's reported.

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Ana Rusula

•8M

Another approach you might consider - reach out to Company B and ask them to correct the 1099-NEC they issued. Explain that these were expense reimbursements, not compensation for services. If they agree, they can issue a corrected 1099-NEC showing $0 or no 1099 at all. I've had success with this approach in the past. Many companies don't fully understand the tax implications of these payments and are willing to fix their mistake once you explain the situation. Worth a try before you go through the hassle of Schedule C reporting!

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Ana Rusula

•8M

That's unfortunate but not surprising. Many companies have rigid policies about this and don't want to create extra work by reissuing forms. In that case, the Schedule C approach others have suggested is definitely your best option. Just make sure you keep meticulous records of all your expenses that match the reimbursement amount. If you can show a perfect offset between the 1099-NEC income and your legitimate business expenses, you shouldn't have any issues even if you get questioned about it later.

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Beth Ford

•2M

This is a really helpful thread! I'm dealing with a similar situation where I got a 1099-NEC for what should have been expense reimbursements. Based on all the advice here, it sounds like Schedule C is the way to go to offset the income with the actual expenses. One question though - when reporting the expenses on Schedule C, do I need to follow the specific IRS categories (like separating meals at 50% deductible vs. full transportation costs), or since these were direct reimbursements can I just list them as "Other expenses" with a description? I want to make sure I'm not overcomplicating this but also want to be completely accurate in case of any questions later. Also really appreciate the suggestions about taxr.ai and Claimyr - it's reassuring to know there are resources available when you need specific guidance on these tricky situations!

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