Catch Income Mismatches Before They Become Notices
A worksheet for reconciling what you actually earned against what insurance, merchant processors, and 1099s reported to the IRS.
The IRS matches what’s reported to them, not what you think should be income. When money arrives through insurance reimbursements, self-pay, and merchant processors separately, it’s easy for the same dollar to get counted twice or for real income to slip through untracked. Five steps: identify every income source, compare reported to actual, flag the common risk areas, document adjustments, and prepare what your CPA will need at filing.
1 Identify All Income Sources
2 Compare Reported vs. Actual Income
3 Flag Common Risk Areas
4 Document Adjustments
5 Prepare for Tax Filing
Built for physicians receiving insurance reimbursements, cash-pay medical practices, practices using Stripe, Square, or similar platforms, and any healthcare provider issued 1099s.
Questions we get a lot
The IRS matches what’s reported on 1099-NEC, 1099-K, and insurance payer records against what you report on your return. When income arrives through insurance reimbursements, self-pay, and merchant processors separately, it’s easy for the same dollar to get counted twice or for real income to go untracked. Reconciling catches both before the IRS does.
$20,000 in payments and more than 200 transactions, per platform. This threshold was permanently restored by the One Big Beautiful Bill Act and, unlike the 1099-NEC threshold, is not adjusted for inflation.
Personal transactions mixed into a business Stripe or Square account. If personal payments run through the same processor as patient payments, the 1099-K total won’t match actual practice income, and untangling it after the fact is far harder than keeping the accounts separate from the start.
The IRS’s automated matching program flags the discrepancy and typically sends a notice — often a CP2000 — proposing additional tax based on the unmatched amount. Reconciling income before filing catches these mismatches while they’re easy to explain, instead of after a notice arrives.
Reconciled income is easier to defend than explained income.
If your income sources feel hard to untangle, we can go through the reconciliation with you before it becomes a notice.
Disclaimer: This checklist is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, federal and state laws and regulations can change without notice. Decisions based on this information should be made in consultation with a licensed CPA or attorney familiar with your specific situation. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this checklist.