Guide · 1099s

Why your 1099 is bigger than your deposits

Short answer: Your carrier's 1099 reports your gross settlement pay, before its deductions. Your bank only sees the net after insurance, plates, tolls, escrow and other charges come out. The gap is those deductions. Record settlements at gross and book each deduction, and your books will match both.

Where the gap comes from

Every week the carrier pays some of your costs for you and keeps the money out of your settlement. Over a year that can add up to many thousands of dollars: insurance every week, plates once or twice a year, tolls on every run, escrow until it reaches its cap. The 1099 counts the pay before those come out; the deposits count it after.

Why it matters

• If your books record only deposits, your income looks lower than the 1099 says. A lender comparing your profit and loss with your tax return sees two different numbers.
• Those deductions are real costs. If they never make it into your books, your expenses are understated too, so both sides are wrong.
• Escrow sits in the gap. It isn't an expense; it's your money held by the carrier.

How to tie them together

1. Collect every settlement sheet for the year.
2. Record each one at gross, with deductions split into their accounts. (Here's how.)
3. Check that your income account equals the year-to-date gross printed on the last sheet of the year.
4. When the 1099 arrives, compare it with that total. If it differs, find out why before your return is filed: a missing week, a correction, or a carryover between years.
5. Give your tax preparer the reconciliation, so the return and the books tell the same story.

Already behind? A Catch-Up Cleanup grosses up a full year of settlements and ties them to your 1099.