Employer gave me incorrect amount on 1099?

Question

So, I filed for an extension because he was on vacation when I reliazed it. I sent a payment for the amount owed according to the amount the 1099 should have had. So I finally receive a call back from my employer he says it would be too difficult for him to go thru the process of changing it and he just wants to give me the difference on what I have to pay the IRS. What should I do?

He is a real estate broker. He put $9,000 more on the 1099-Misc.

Answer 1

Your responsibility as a taxpayer is to report the income you received and deduct your actual expenses. If the 1099-MISC is wrong, that can possibly create an IRS issue, but the key point is that you have proof of what you received. From what you're saying, apparently the client overstated your 1099. If you have reported more gross income on your Schedule C than what's on that one specific 1099, the IRS won't even realize it's wrong. However, if that's the only client you have, and you've reported less than the amount on the 1099, you may have some explaining to do if the IRS contacts you about the difference. If this is your only 1099, I'd recommend that you insist to the client that you need the 1099 corrected (which isn't all that difficult to fix, by the way) because you don't want to be in the position to explain to the IRS that your client understated the 1099, possibly leading the IRS straight to his door, too.

Answer 2

Do like everyone else says and try to work it out with the issuer. If that doesn't work then report the amount of the 1099 under schedule C income. As another deduction take whatever amount gets you down to the correct amount, $865 I guess. If the software lets you write the expense call it "over reported income" and let it go. The burden will be on your to prove it wrong but odds are in your favor it never gets looked at. If it does, I'd make the company you received it from detail out the checks written to you. I'd make really sure you didn't receive a second check though.

Answer 3

The only problem is that he claimed a deduction (for the amount he paid you) that was inflated from what it should have been, which could have been accidental or could have been deliberate tax evasion - if you go along with his suggestion, you're part of it and could be in trouble.

If the amount difference is something like $100 or less, it was probably just a mistake, and probably not worth fighting over. If it's thousands of dollars, then it's either a major mistake or more likely deliberate, and you're on real thin ice if you just take the extra money - tell him you're sorry but you can't go along with that - you don't have to make any accusations, just leave it at that. If he still refuses to make the correction, then notify the IRS of the problem.

Answer 4

The answer is no. You need a corrected 1099, because if he claims another amount, he will and can deduct that and you will be responsible for whatever he claims he paid you. If you know this person than he is taking advantage of you.

Answer 5

if that's ok with you then go for it.