As a tax question, this has no answer. If you are an independent contractor, all payments (including reimbursements) should be reported on the 1099.
As a billing question, you can either request a certain number of days with pay in the contract, or adjust your payment rate to include the vacation.
I'm going to be offline for a bit; if you don't feel that I've supplied an adequate answer, you can opt me out. I should be able to check back every hour or so.