I just received a 1099 from one of the companies I worked with in 2011 and notice they included reimbursements as taxable compensation in my gross wages. The reimbursements were for parking (the assignments mystery shops for a parking company), and more often than not, the parking fee was more than what the assignment paid - so my wages with this company are grossly inflated. Is this normally how MSCs report wages on 1099s? This is the first time I've received one like this. Thanks!!

chigirl,
That is one of the ways that many MSCs report. You claim the total as income and the amount of the parking fees as business expense, and it all works out on the forms.

Thanks for the response, walesmaven. I just got off the phone with the IRS and they actually told me something different, specifically that as ICs, a company can only 1099 you for reimbursed expenses if you have not provided them with adequate explanation and detailed receipts (which of course I did, or I would not have been paid in the first place). So their advice was to contact the company and request a corrected 1099 showing only my actual income, because I cannot claim the parking fees as expenses since I was reimbursed for them. Crazy.

and, the IRS help line is not always correct, BTW
You will not be in trouble if you back them out as business expenses. I sincerely doubt that the MSC is going to send you a new 1099. Since it has NO effect on your tax bill, I suggest doing it the simpler way.

Flash?

I concur with Walesmaven.

Frequently the answer you get from any help line is just an affirmation of what you ask. So if you asked "Should the MSP send me a corrected 1099 because it is wrong in that includes both the fee and the reimbursement for expenses as income?", they will of course say "Yes". If you ask "Should I claim every penny I'm paid and deduct out the reimbursements?", they will probably say "Yes". When you go deeper into 'explanations' and 'what ifs' any help line in the world will start to waffle.

When I have had very specific questions for which I wanted a very specific answer IN WRITING, I have used the IRS email help desk and stated the question in such a way that I would be surprised not to get the answer I wanted. I then have printed off the email to include in my file with my tax return. There were approximately 6 such questions I asked and had answered just with filing the final return for my Mom and for her Estate after she passed. They were questions that were not clear from the instructions and posing the question for a confirming answer took care in crafting. In one case I did not get the answer I wanted so I waited a week and emailed again the identical question. The second time I got the answer I wanted.

Tax code is not exact when it comes to nuances. That is why HRB may find you 'deductions' for last year that JH did not find. Their interpretation of tax code is likely to be different in the nuances and the Tax Court rulings. Was either one 'wrong'? No.