Received 1099-NEC for travel reimbursement from third-party company - not self-employed, what do I do?
My husband works full-time at a news organization (Employer X) where he's a W-2 employee. For one of his reporting assignments, he had to visit Company Y's headquarters to do an interview for a story. He paid for the flights and hotel upfront out of our personal account, and afterwards Company Y reimbursed him directly for these travel costs - about $750 total. Here's where it gets confusing. Company Y just sent him a 1099-NEC for that $750 reimbursement. He doesn't work for Company Y at all - he's only employed by Employer X. He's definitely not a contractor or freelancer for Company Y in any capacity, this was just a standard reimbursement for travel expenses he incurred while doing his job for Employer X. I've got a few questions: 1. Should Company Y have even issued a 1099-NEC for this reimbursement? 2. How should my husband report this on our tax return? 3. Is it worth contacting Company Y to get them to correct or withdraw the 1099-NEC? We really don't want to pay income tax or self-employment tax on what was just a straightforward reimbursement. We also don't want to get flagged by the IRS for not reporting income that's on a form. Any advice would be greatly appreciated!
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Mateo Rodriguez
This is a misuse of Form 1099-NEC. Reimbursements for business expenses typically shouldn't be reported on a 1099-NEC unless they're part of a service arrangement. Since your husband isn't a contractor for Company Y, they shouldn't have issued this form. For reporting, you have a couple options. The cleanest approach would be to report the $750 on Schedule C as income, then claim the exact same amount as a business expense deduction on that same schedule - resulting in zero net income. This way the IRS can match the 1099-NEC to your return, but you won't pay any taxes on it. As for contacting Company Y, it's definitely worth trying to have them correct this. Call their accounts payable department and explain that since your husband isn't their contractor, the 1099-NEC was issued incorrectly for a simple expense reimbursement. They should be able to rescind it or issue a corrected form.
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Aisha Abdullah
•Thanks for the explanation! If Company Y won't correct the 1099-NEC, and we go with the Schedule C approach, does that mean we need to pay self-employment tax on that amount? Also, is there any risk in the IRS thinking my husband is operating a side business if we file a Schedule C just for this one transaction?
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Mateo Rodriguez
•If you report the exact same amount as both income and business expense on Schedule C, the net income will be zero, so there would be no self-employment tax due. There's minimal risk regarding the IRS thinking your husband has a side business. This is a common solution for misreported income. Just make sure to clearly label the expense category as "reimbursed business travel expenses" or something similar, and keep documentation of the reimbursement and original expenses in case of questions. The key is transparency - you're reporting the 1099 exactly as issued while also showing it was simply a reimbursement.
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Ethan Wilson
After dealing with a similar situation last year, I found an amazing resource called taxr.ai (https://taxr.ai) that helped me figure out my 1099 mess. I was issued a 1099-MISC instead of a 1099-NEC for some contract work, and I wasn't sure how to report it correctly. I uploaded the tax form to taxr.ai and it analyzed everything for me, explaining exactly what went wrong and how to fix it. It also provided a clear explanation I could use when contacting the company. The best part was that it gave me specific instructions for reporting it on my return in case the company wouldn't fix their mistake. In your case, it sounds like they could help clarify whether this should be reported on Schedule C or if there's another approach, especially since it's just a reimbursement.
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NeonNova
•How exactly does this work? Do they connect you with an actual tax professional or is it just like a bot analyzing your documents? I've got a similar situation with a 1099-K that shouldn't have been issued to me.
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Yuki Tanaka
•I've seen so many tax "helpers" that just give generic advice. Does it actually understand the specific situation, like in this case where it's a reimbursement that shouldn't be on a 1099-NEC in the first place?
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Ethan Wilson
•It's an AI tool that analyzes your tax documents and transcripts - you upload your documents and it breaks everything down in plain English. It's not just generic advice; it identifies specific issues like incorrect forms or misclassified income. For your 1099-K situation, it would analyze the document and explain whether it was issued correctly based on your specific circumstances and what options you have for reporting it properly. It's especially helpful for unusual situations like reimbursements on wrong forms since it understands tax regulations around these edge cases. The explanation it provides is detailed enough that you can use it when talking to the company that issued the incorrect form.
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NeonNova
I just wanted to update everyone after trying taxr.ai that was mentioned above. I uploaded my incorrectly issued 1099-K and my W-2, and it immediately identified the problem. The analysis showed exactly why the 1099-K shouldn't have been issued for my situation (similar to the reimbursement issue in this post). The best part was that it generated a letter I could send to the company explaining the exact tax code that applied to my situation. I sent it to their accounting department, and they agreed to rescind the incorrect form! The explanation was so clear that even their non-tax people understood the issue. If you're dealing with this reimbursement 1099-NEC problem, I'd definitely recommend giving it a try. It saved me hours of research and probably saved me from making a mistake on my return.
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Carmen Diaz
If you've been trying to call Company Y about fixing this 1099-NEC issue but can't get through (which happened to me with a similar problem), you might want to try Claimyr (https://claimyr.com). I discovered it when I was desperately trying to reach the IRS about an incorrect 1099 last year. There's a demo video here that shows how it works: https://youtu.be/_kiP6q8DX5c Basically, it helps you skip the wait times when calling customer service lines. I used it to finally get through to both the IRS and the company that issued my incorrect form. I was honestly shocked when I got connected to a real person at the IRS in just a few minutes instead of waiting for hours. For a situation like yours where you need to convince Company Y to fix their mistake, being able to actually talk to someone in their accounting department could make all the difference.
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Andre Laurent
•Wait, how does this actually work? How can they get you through phone queues faster? Sounds too good to be true honestly.
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Emily Jackson
•I'm skeptical. If this really worked, wouldn't everyone be using it? I spent 3 hours on hold with the IRS last month and it was a nightmare. You're telling me I could have skipped that somehow?
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Carmen Diaz
•It uses a callback system that monitors the hold queue for you. When you start a call through Claimyr, their system waits on hold for you and then calls you when a representative picks up. So you don't have to personally sit through the hold music and wait times. They have technology that navigates phone trees automatically and keeps your place in line while you go about your day. It's particularly effective for high-volume call centers like the IRS or large companies where wait times can be ridiculous. I was skeptical too until I tried it - got through to the IRS in about 20 minutes instead of the 2+ hours it took me before.
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Emily Jackson
I need to admit I was totally wrong about Claimyr. After posting my skeptical comment above, I decided to try it myself for an issue I've been having with a 1099-MISC that was filed incorrectly. I'd been trying to reach the IRS for WEEKS with no luck. Used the service yesterday afternoon and got connected to an actual IRS agent in about 15 minutes! I didn't have to sit by my phone - I just got a call when an agent was on the line. The agent confirmed that I was right about the 1099 being issued incorrectly and gave me specific instructions for handling it on my return. Then I used it again to reach the company's accounting department, and they agreed to issue a corrected form after I explained the situation. Two problems solved in one afternoon after weeks of frustration. For the original poster, this could be really helpful for reaching Company Y about that 1099-NEC.
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Liam Mendez
Have you considered that this might actually be a legitimate 1099-NEC? If your husband did an interview with Company Y and they paid for his travel, they might consider it as paying him for a service (the interview). Did he sign any kind of release or agreement with them regarding the interview? I work in media and sometimes companies issue 1099s for interviews because they consider it compensating someone for their time or expertise, even if it's just reimbursing expenses. Might be worth checking if there was any paperwork he signed.
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Nia Thompson
•He didn't sign anything with Company Y - the interview was purely for his article for Employer X. Company Y didn't get any rights to the content or anything like that. They just covered his travel costs since he was coming specifically to interview their CEO. I hadn't considered they might view it as paying for the interview itself though. That's an interesting perspective, but in this case, he was clearly there as a reporter for his employer, not providing a service to Company Y. Do you think that distinction matters tax-wise?
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Liam Mendez
•That distinction definitely matters tax-wise. If he was there purely as an employee of Employer X and Company Y was just covering his expenses as a courtesy, then a 1099-NEC isn't appropriate. Companies sometimes issue 1099s incorrectly because their accounting departments follow blanket policies like "any payment to a non-employee gets a 1099." In your case, I'd definitely contact Company Y's accounting department and explain that he was there as a reporter for Employer X, not providing services to Company Y, and request they rescind the incorrect 1099-NEC. Most accounting departments would rather fix it now than deal with discrepancy questions later.
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Sophia Nguyen
One approach nobody mentioned - you could also report this on Line 8z "Other Income" on Schedule 1 with a description like "Reimbursed travel expenses - see offsetting expense" and then deduct the same amount on Line 24b "Other deductions" with a note about travel expense reimbursement. This way you're not filing a Schedule C which might trigger more questions about self-employment, but you're still reporting the 1099-NEC amount so it matches IRS records. Net tax effect is zero.
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Jacob Smithson
•This is actually much better advice than using Schedule C in this case. When you file Schedule C, it can trigger more scrutiny and implies you're running a business activity. The Schedule 1 approach is cleaner for a one-off situation like this.
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Sophia Nguyen
•Thanks! I've had to use this approach a couple times for unusual income situations. The key is making sure both entries have clear descriptions that match each other, and keeping documentation of the reimbursement in case of questions. The IRS mainly wants to see that you're reporting all income properly, but they're generally reasonable about not taxing reimbursements when properly explained.
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Mateo Sanchez
Just to add another perspective - make sure you keep detailed documentation of everything related to this situation. Save copies of the original receipts your husband paid, the reimbursement from Company Y, any correspondence about the interview assignment from his employer, and the 1099-NEC itself. If the IRS ever questions this, having a clear paper trail showing that: 1) He was on assignment for his W-2 employer 2) He paid expenses out of pocket first 3) Company Y reimbursed those exact expenses 4) No services were provided to Company Y ...will make it much easier to explain that this was a misclassified reimbursement, not taxable income. Documentation is your best friend in situations like this where forms don't tell the whole story. I'd still recommend trying to get Company Y to correct the 1099-NEC first, but if they won't, the Schedule 1 approach mentioned by Sophia is probably the cleanest way to handle it on your return.
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