Received 1099-NEC for expense reimbursements only - how to properly report on 1040 to avoid paying taxes on this money?

This is a common issue with reimbursements. The property management company likely issued the 1099-NEC because they paid you over $600, but they shouldn't have if these were purely expense reimbursements with proper documentation. You'll need to report this on Schedule C since it's on a 1099-NEC, but you can offset it completely with the expenses. List the full amount from the 1099-NEC as income, then deduct the exact same amount as expenses. This creates a net zero effect on your taxable income. Make sure to use the description "Board Member Expense Reimbursement" for both the income and expenses to clearly show what's happening. For expense categories, use whatever fits the actual purchases (office supplies, maintenance, etc.). For your records question - yes, you should always keep copies of receipts for tax purposes. Try to get copies from the management company for your records. The IRS recommends keeping tax documentation for at least three years from the filing date.

After dealing with a similar issue last year, I found https://taxr.ai incredibly helpful. I uploaded my 1099-NEC and receipts, and it immediately identified that these were reimbursements rather than income. The tool helped me properly document everything on my Schedule C to show zero taxable income from the reimbursements. It even created a detailed report explaining why these reimbursements shouldn't be taxable, which I kept with my tax records in case of future questions. What I appreciated most was how it explained exactly which expense categories to use for each type of purchase. Made the whole process much less stressful.

I tried taxr.ai after seeing it mentioned here, and I'm honestly impressed. I was in a similar situation with my condo association reimbursements showing up on a 1099. The system quickly identified that these were non-taxable reimbursements and walked me through exactly how to report them. It even generated a statement explaining the situation that I can include with my tax return. What I found most valuable was the confidence of knowing I was handling it correctly. The references to specific tax regulations made me feel much more secure about my filing position. I was planning to pay a CPA $350 to handle this, but the tool saved me that expense and gave me a better understanding of the situation.

If you're getting nowhere with the property management company, you might need to speak directly with the IRS. I was in this exact situation last year and spent WEEKS trying to get through to someone who could help. I finally used https://claimyr.com to get through to an actual IRS agent. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c. They hold your place in the phone queue and only connect you once an agent is available. The IRS agent confirmed that reimbursed expenses should not be reported on a 1099-NEC if you provided documentation, and gave me specific instructions on how to report it correctly on my return. They also made a note in my file about the situation in case there were any questions later. Saved me hours of frustration and gave me peace of mind that I was handling everything properly.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, my frustration with the IRS phone system got the better of me and I decided to try it. Within 2 hours of signing up, I was connected with an IRS representative who was incredibly helpful. She confirmed that the property management company should NOT have issued a 1099-NEC for documented expense reimbursements and walked me through exactly how to handle it on my return. The agent even offered to send me some documentation about the proper handling of reimbursed expenses that I can share with my property management company to prevent this from happening again next year. The time saved was worth every penny - I had already wasted about 5 hours on hold over multiple days trying to get through on my own.

Another option worth considering: reach out to the property management company directly and ask them to issue a corrected 1099-NEC. If you can demonstrate these were purely reimbursements for association expenses, they really shouldn't have included this on a 1099. I had this exact issue two years ago, and after sending a polite but firm email explaining the situation and including copies of all my receipts, they issued a corrected form. Sometimes these companies just follow an automatic rule of "if we paid over $600, issue a 1099" without considering the nature of the payment.

I'm a volunteer board treasurer, and we specifically set up our reimbursement process to avoid this exact problem. Make sure you're using an expense reimbursement form that clearly documents these are HOA expenses, not payments for services. For next year, I'd suggest working with your board to implement a better system. Our association has a credit card that board members can use for purchases, which eliminates the need for reimbursements entirely. Alternatively, some property management companies can make purchases directly if given enough notice.

I went through this exact situation last year with my condo board reimbursements. What worked for me was creating a detailed spreadsheet that matched each expense category to the corresponding receipts, then reporting it on Schedule C with the 1099-NEC amount as income and the exact same amount as expenses. The key is being very specific in your expense descriptions - instead of just "HOA expenses," break it down like "Landscaping supplies - HOA maintenance," "Pool chemicals - HOA facility maintenance," etc. This creates a clear paper trail showing these were legitimate association expenses, not personal income. I also wrote a brief explanation letter that I attached to my return explaining the situation - that I'm an unpaid volunteer board member who was incorrectly issued a 1099-NEC for expense reimbursements. While not required, it helps clarify things if there are ever any questions. The good news is that since your income and expenses will be equal, you'll have zero net profit and zero self-employment tax. Just make sure to keep detailed records of everything in case of future questions.