This topic has been discussed at length here. You may want to search for it to get more detail and to see the different answers. Some of the regulars here, myself included, do not always respond to posts that are substantially similar to other posts.

Report your income from the 1099 then deduct the expenses you were reimbursed for. This gets you to the same place as if you only reported the monies which were not reimbursements and left the reimbursement off your return.

There is at least one regular here, whom I respect professionally, who has cited something (an instruction from a publication I believe) saying that the payor does NOT have to report your reimbursements as income to you on the 1099. This seems contrary to the concept of being a self employed contractor, but his reference did check out. The only caveat I have to it is that publications cannot be relied on as law, they are merely guidance.

EAgent is correct - The 1099 may report either the gross payments, including the reimbursement - in which case you deduct the amount of reimbursement as expense or it may report the net amount provided the payer maintains the records under rules similar to accountable plan rules for employee business expense reimbursement. In that case, you would not deduct the reimbursement because it was not included in your income. Either way gets you to the same place (for most purposes). There are times when it may make a difference where an requirement is based on gross receipts rather than net income.

In addition, if the payment is for materials which are not incidental to the services, payments for goods are not generally reportable on Form 1099-MISC -

"Sec. 1.6041-3 Payments for which no return of information is required under section 6041

Returns of information are not required under section 6041 and §§1.6041–1 and 1.6041–2 for payments described in paragraphs (a) through (q) of this section. See §1.6041–4 for reporting exemptions regarding payments to foreign persons.

... (c) Payments of bills for merchandise, telegrams, telephone, freight, storage, and similar charges."

This is in the regulation. However, payments for materials which are incidental to the services would be included - for example, for tax preparaton, the paper, ink, folders, and CD's I provide to my clients as a result of the tax preparation services are part of the service.

Expenses reimbursed under an accountable plan are also excluded in part (h) but that part makes reference to "employee".

"(h)(1) In general. Payments made under reimbursement or other expense allowance arrangements that meet the requirements of section 62(c) of the Code and §1.62–2, that do not exceed the amount of the expenses substantiated (i.e., amounts which are treated as paid under an accountable plan), and that are received by an employee on or after January 1, 1989, with respect to expenses paid or incurred on or after January 1, 1989."

Emily: Both EA Agent and Pat are correct! Like me EA Agent explains it and Pat is the "code and reg man (wink)" Cutting to the bottom line, a taxpayer is suppose to report all income received, whether reported on a 1099-MISC, etc or not. In your case, whether the organization reported the expense reimbursement as well as your "fee" you should be reporting as gross revenue both items, taking the monies you paid as deductible expenses on the appropriate lines of schedule C of your tax return. On net you still have the same result. If IRS questions you later on, looking at bank statements, etc, by showing your reimbursed expenses as well as your fee income in revenue will help you satisfy the curiosity of the IRS auditor.