tax question?

Question

I am self employed,and have already filed my taxes for 2006.In Feb.of 2006,I house sat for someone, and got paid one thousand dollars.I received two checks,each for five hundred,from two different person's accounts.Now, one of the people wants to send me a 1099 for the thousand dollars,even though only five hundred came from him.He thinks that he can take the deduction for the money he paid me.I keep telling him that since the check was for under six hundred dollars,that he cannot take the deduction,and I don't have to claim the money.He was supposed to get this to me by Jan 31st,and he's just getting around to it now.He's just looking for every deduction he can get because he screwed up.He said I should just file an amended return next year.Who's right? Please don't answer if you really don't know.

He is self employed as well,and says that anyone he paid for anything is reportable.I know that if I file an amended tax,that it would be for 2006 taxes.What can happen to me if I choose to ignore the 1099?

Answer 1

If you claimed the money he paid you on your return already then you would not have to do anything as it was already reported, keep the 1099 for your records.

If you did not claim this money on your return you will need to file an amended return and pay any additional tax you owe by April 17th to avoid penalties and interest.

Update
If you did not claim the money that he paid you, you will eventually get a letter from the IRS. because of him reporting it on a 1099. If you reported the total income that you received housesitting from both parties and all other income you would be fine.

Answer 2

you are both wrong
he can't claim a deduction for house setting
$600. has nothing to do with anything,, it's a myth
you amend a return for the year you made the money, not the next year
if he sends you a 1099,, then worry about it
but don't claim more than he paid you no matter what the 1099 says

Answer 3

Even if you were only paid $5.00 you are suppose to report it to the IRS and pay taxes on it. The entire $1000 is taxable regardless of who paid it to you or how much each person paid. The $600.00 minimum is only the requirement for payer to have to report it to the IRS. As to whether or not he can claim it on his taxes, that is between him and the IRS. You should amend your return especially if he filed a 1099 for you as you will receive a bill from the IRS otherwise.

Answer 4

If that was a deductible expense, the amount wouldn't have to be $600 or over for him to deduct it. But he's wrong if he says that he can deduct anything he pays to anybody - it still has to be a legitimate deduction, and it's hard to see how hiring a house-sitter would qualify. But the $1000 was income to you anyway, whether he or the other person can deduct it or not, so you should have claimed it.

So to answer your final question "who's right?" - neither of you is.