Question

Working as contractor (1099) for a company that went under - can I use the $4,700 in unpaid invoices on my taxes?

Forum|Forum|3 years ago
March 5, 2023
1 reply
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I have an LLC for my consulting work I do on the side as a software developer. I have been working with a company for 2-3 years (receive a 1099-NEC at the end of the year) and this past year, my invoices were taking longer to get paid than normal. Sure enough, they ran out of money and the owner told me they were closing up shop (I dont know if they filed for Bankruptcy or what was legally done). I later found out the company was purchased by another company in an "assets only sale" (I think that was the term they told me).

From everyone I have spoken to, it sounds like the new company has no obligation to pay my unpaid invoices (approx. $4,700) and they confirmed with me they are not going to. And there is no way I will get anything from the old company. So my question is, can I do anything with my ~ $4,700 of unpaid invoices on my taxes? I don't suppose I can count them as expenses or anything to help lower my overall tax burden?

A sad developer,
J.R.

Not A Product Question

leeloo

This is not an expense, it is just not income. You are only taxed on the income you make, so you will pay tax on $4,700 of less income. If, however, this amount was included on a 1099, you will have to make a miscellaneuous expense entry noting that you were never paid.

If you had to spend any money to earn this particular $4,700, that is a deductible expense.