This is a very much talked about subject on the internet, but a lot of controllers say they don't want to take any chance that the IRS will reclassify an independent contractor as an employee, so they 1099 every dollar they pay them and leave it up to the contractor to track and report mileage, and other expenses. As for the original poster's question if his client was given funds that were not on the 1099, then he should only report any differences in unreported funds, and actual expense IE: paid him 40 cents per mile for gas, then he should only claim 18 cents on his taxes. Anyone taking bets on what he will report. 🙂