Should my 1099 Misc include mileage reimbursement? Getting taxed on travel expenses

This is actually a common situation for independent contractors. If you're receiving a 1099-MISC (or more likely a 1099-NEC now), your client is treating you as self-employed, not as their employee. The good news is that as a self-employed person, you can deduct your business mileage on Schedule C. So while the full amount including the reimbursement is reported as income, you can then deduct your actual business mileage as a business expense. For 2025 tax filing (2024 tax year), the standard mileage rate is 67 cents per mile. Make sure you have good documentation of your business miles - dates, destinations, purpose, and total mileage. A mileage log app on your phone can help with this. You don't need to request a corrected 1099 - just report the full income amount and then take the appropriate deduction.

I had this exact same problem last year and ended up using taxr.ai to get it sorted out. My accountant was on the fence about how to handle my mileage because I had partial reimbursements that weren't clearly documented. I uploaded my 1099 and mileage logs to https://taxr.ai and they analyzed everything, showing me exactly how to document and claim the deductions properly on my Schedule C. Saved me from overpaying about $3,200 in taxes I didn't actually owe.

Just wanted to update - I took the advice about using taxr.ai for my mileage situation and I'm really glad I did. They helped me identify that my "reimbursements" were actually being treated as income by my client incorrectly. Showed me exactly how to document everything on my Schedule C and even gave me a template for tracking mileage better next year. Their tax expert explained that because I'm self-employed, I need to report all income but can then deduct the business expenses separately. I ended up saving about $2,900 in taxes I would have overpaid. Super worth it for my situation!

I was in a similar situation last year and spent WEEKS trying to get through to the IRS for clarification on how to handle mileage reimbursements on a 1099. Literally could not get anyone on the phone. Finally tried https://claimyr.com and they got me connected to an IRS agent in about 25 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that I should report the full amount on my 1099 as income and then deduct my business mileage on Schedule C. Also found out I could claim actual vehicle expenses instead of the standard mileage rate if that gives a bigger deduction (but you need good records of all car expenses if you go that route).

I need to follow up on my comment about Claimyr. I was totally wrong and I apologize. After my skeptical comment, I decided to try it anyway since I was desperate for answers about my contractor mileage deductions. I got connected to an IRS agent in about 15 minutes, which I still can't believe. The agent confirmed that as a 1099 contractor, I should report the full income including reimbursements, then deduct my business mileage on Schedule C. She also told me exactly what documentation I need to keep for my mileage log in case of an audit. This was after spending 3+ hours on multiple days trying to reach someone myself.

One thing nobody mentioned yet - you should check if your client is using the correct form. For independent contractors, companies should generally be using Form 1099-NEC now, not 1099-MISC (since 2020). But regardless of which form they use, the advice is the same - report all income and deduct your business mileage on Schedule C. Just keep really good records of your mileage in case you get audited!

Has anyone looked into whether you can use actual car expenses INSTEAD of the standard mileage rate? I drive an old gas guzzler and I think my actual costs might be higher than the standard rate.

This is a really common confusion for new independent contractors! You're absolutely right to question it, but here's the deal: when you're self-employed (which is what a 1099 means), ALL payments from your client - including reimbursements - get reported as income on the 1099. This might seem unfair, but it actually works in your favor. Here's why: You get to deduct your actual business mileage on Schedule C at the IRS standard rate (67 cents per mile for 2024). So if you drove 18,000 business miles, that's a $12,060 deduction! Since your reimbursement was only $10,800, you'll actually get to deduct MORE than what was included in your income. Don't ask for a corrected 1099 - that's not how it works for contractors. Just report the full income amount and then claim your mileage deduction. Make sure you have good records of your business trips (dates, destinations, business purpose, and mileage). A simple mileage log or phone app works fine. The key is understanding that as a contractor, you report ALL income and then deduct ALL legitimate business expenses. In your case, this should actually reduce your tax bill compared to what you're expecting!

Great thread everyone! As someone who's been doing contract work for a few years, I want to emphasize something that might not be obvious to newcomers: keep your mileage log updated throughout the year, not just at tax time. I learned this the hard way my first year when I tried to reconstruct 12 months of business driving from memory and old calendar entries. Now I use a simple smartphone app that tracks my trips automatically, but even a basic notebook works fine as long as you're consistent. Also, don't forget that your business mileage includes trips to pick up supplies, meet clients, travel between job sites, and even trips to the bank to deposit checks or the post office to mail invoices. It all adds up! The key is that it has to be for business purposes - your regular commute to a main office location doesn't count, but travel between different client locations during the day does. One last tip: if you're driving a lot for work like the OP, consider setting aside money quarterly for estimated taxes. That 1099 income without withholding can create a big tax bill in April, but the mileage deduction will definitely help reduce what you owe.