I did a small amount of computer work for someone and that totalled $650. He mailed me a 1099-MISC!!!!!?

Question

Anyway the work was done between 05 and 06. It was such a small amount in 05 that I didn't even report it that year. Federal taxes were never taken out of it either. It was paid out with check though his bank. This person is a small 3 man company. He totalled the 1099-MISC and issued it for 06 instead of issuing one in 05 and another in 06. The problem is that In 05 I also made around 24K and my tax liability was soooo low. In 06 I made around 50. When I entered that 1099-MISC in it knocks off $200.00 off of my refund. Could I use my bank statements as proof that It was part of the year. Do I have to report this 1099-MISC.

Answer 1

He should only have sent you a 1099 for the money paid to you in 2006, and only if that was in excess of $600. If you, for example, were paid $250 in 2005 and $400 in 2006, he was not required to send you a 1099 for either year.

However, it is still taxable income to you, plus if you earn over $400 from "self employment" in any tax year, you are liable for self employment tax.

I would definitely get the 2006 1099 corrected to show only the income you received from him in 2006. If you don't, the IRS is going to expect you to report it all in 2006 since that's what the 1099 was for, and then talk to a tax professional about how to handle reporting the income.

Answer 2

When were you actually paid? That's what matters. If he paid you in 06, the income to you is taxed in 06. It does not matter when the work was done.

Since they paid you more than $599, you were properly sent a Form 1099 for the amounts that they paid you.

Unless you can prove that you were actually paid part of the money in 2005 and part in 2006 AND get them to send you corrected Forms 1099 you'll have to claim this income on your 2006 returns.

YES, you MUST report this income. It's already been reported to the IRS and if you don't, you'll be hearing from them.

You must also file Schedule SE and pay the Self Employment tax on that amount. The SE tax is a flat 15.3%. If you have legitimate business expense deductions from that you can file Schedule C to take those expenses. The SE tax will be on the net profit after expenses.

Answer 3

First, you need to get a hold of the 1099 issuer. If he's lumped 05 and '06 figures together, then he's in the wrong and he needs to fix it NOW. If he has not mailed his copy of the 1099 to the IRS, then everything should be easy to fix.

He needs to issue a 1099 to you only if the amount that he paid you IN 2006 is $600 or over. If that amount is $599 or less, then no 1099 is necessary.

Now, if he has already mailed his copy of the 1099 to the IRS then you'll need to request that he issue an AMENDED 1099 to you and the IRS, indicating the true 2006 figures.

Good luck!

Answer 4

You do have to report it, as it has already been reported to the IRS.

I would ask the person to issue a CORRECTED 1099, correctly reflecting the amounts between 05 adn 06. If he refuses, then you may want to contact the IRS and find out the procedure for filing with an incorrect 1099. Be sure to let them know that you can prove that the amount covers 2 years and that you received it over the course of 2 years. If you received the entire payment in one year, then it is taxable in the year of receipt, as a cash basis taxpayer.

Answer 5

Call the person you did the work for, and let him know he needs to reissue the 1099 as two forms for the two years, for whatever he paid you in each year.

Then you'll have to go back and amend your 2005 return to show the income you got then. You'll owe interest on the unpaid taxes from then.

If the amount that was actually paid in 2005 was very low as you seem to indicate, you might be ahead to just claim the 1099 that was sent to you - it might not make much difference.

Strictly speaking, you should split it into the proper year. But it might end up costing you. You'll pay the self-employment tax either way, and the interest on the unpaid amount from 2005, plus the extra taxes then, might add up to as much or more than you'll save on 2006.

Without numbers on the amounts for the two years for the 1099, it's a little hard to tell.

Answer 6

You must receive a 1099 if you received $650 for this work and he is claiming it as a business expense. You have 2 options - include the income on your 2006 taxes and pay the taxes now, or split it between 05 and 06 and pay the taxes for each tax year. You'll have to file an ammended return for 05 with a note explaining why this happened. This opens you up to a lot of IRS scrutiny, so you probably don't want to do this ammended return if you don't have to. They'll want to know why you forgot this income last year.

Answer 7

I would go to the issuer of the 1099 and explain that it is illegal for him to "lump" the income together from different years. Also anything made under $600 is not reportable. Make them send an amended 1099. Make sure you keep COPIES!

Answer 8

I received a "gift" from a company in 2005 that was about $800 and they sent me a 1099-MISC. My accountant said if it was ever picked up by the IRS you can be audited. I suggest you claim it and move on. It sucks but it's not worth the hassle.

Death and taxes dude..... inevitable.

Answer 9

A 1099-MISC is for reporting earnings. It would not have something to do with pastime money. - in case you gained a 1099-MISC out of your finance employer, it may be an errors. that's all $0, you do no longer ought to get it fixed, because of the fact that's saying there is not any earnings concerning to it. because of the fact that vehicle pastime isn't a tax deduction, there shoud be no 1099 given. - in case you got one, call your finance employer and ask what the 1099 is for. upload'l documents: So now which you have the paperwork from them, why do no longer you call them returned and ask to bypass via the billing with them, so as that they are in a position to work out the place they are incorrect, or you could comprehend why they are spectacular.