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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I am an attorney. I get reimbursed for expenses incurred on

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I am an attorney. I get reimbursed for expenses incurred on behalf of clients. However, the 1099 at year end in box 7 is a lump sum which includes attorney's fees and the reimbursed expenses.
Per IRS attorney are not to deduct expenses incurred that are reimburseable by the client.
Therefore, how do I avoid paying income tax on the box 7 total which includes the reimbursed expenses?

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

That comment/instruction assumes that you aren't including the expenses in your revenue.

Stephen G :

For the attorney's I represented in the past; I just included an expense for the reimbursed expenses with a caption like this:

Stephen G :

"Reimbursed client expenses included in revenue"

Stephen G :

It can be abbreviated as follows:

Stephen G :

Reimb clt exp incl in Revenue

Stephen G :

Any questions?

Stephen G :

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Customer:

On my Schedule C, I have included the reimbursed costs as part of my business itemized expenses since my clients include the total in their 1099

Stephen G :

Yes, that's exactly what I suggested that you do. Otherwise you would have to include a reconciliation of the 1099 totals to the revenue you are actually reporting. Also, reconciling items would include revenue that you received and included on your Schedule C for receipts that had no corresponding 1099. So, it is much easier just to include the reimbursed expenses as an expense item as they have already been included in revenue.

Stephen G :

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