Chitika 1099s

[nmjudy]

I just received my 1099 form from Chitika - which totals my November and December earnings. I didn't receive my November earnings until January 17, 2006 (audited January 13, 2006) and am still waiting for payment to clear for the December earnings.

So, if I filed my taxes today, I would have to pay tax on money I haven't even received yet. How can they do that?

[LifeinAsia]

The 1099 represents what the company says they paid to you last year. I don't know much about Chitika so I can't comment on exactly what they consider a "payment."

If they put the money in an account for you and you periodically have them send you a "withdrawl" from that account, then their payment is when they put the money in the account, even if you didn't withdraw it until later. (Another example: if a bank paid you interest at 11:59 P.M. on December 31, 2005, that interest is considered income for tax year 2005, even if you didn't withdraw it until January 5, 2006.)

If they send you a check every month for all your earnings the prior month, then their payment is when they send the check.

Because of the delay between sending and receiving, what they paid and what you constructively received in any given tax year may not match exactly. Any difference should be reported on your tax return. Report the full amount of the 1099 (since that's what's reported to the IRS and if it doesn't match, your return will likely be flagged for a CP-2000 nasty-gram), then back out the amount you didn't actually receive last year, adding a note as to what happened to that money. Also remember that you'll have to add that number to your 2006 taxes.