Small Business owned by Wife with 1099 in Husband's name

[thenextstepp]

Good Afternoon All,

I've got a question I could use some advice on.  My wife started a company this year and I've been helping her get her foot in the door with some of the industry people I know.  We received a 1099 from one such client and it has the correct TIN number but it was issued in my name since I did most of the leg work with the client.  Is this going to be an issue?  Do I have to contact the client and have them correct the 1099?  Or are there any other options?

Thanks a Bunch

[ColeenD3 · Accepted solution]

The best option is to get a corrected 1099. This is the cleanest way to go about it.

Another option is to file a Schedule C and assign her the amount as contract labor. You will have to issue her a 1099-NEC if the amount is $600 or more.

[thenextstepp]

That's what I kind of figured.  Thanks for the help.  Now its the waiting game to get them to correct the 1099 😬

[Opus 17 · Accepted solution]

Your wife's tax number but your name?

You would not, in this case, report the income in your own name and then issue your wife a 1099 as if she is your subcontractor.  Since the form doesn't correspond to either one of you, I would ask to get it corrected, but if not, I would simply have your wife report all her income as usual.  She is required to keep accurate business records and report all her income, even if she doesn't get tax paperwork, of course.

The worst that would happen is that the IRS would send a letter asking what's going on.  Your wife would reply by explaining that the client used the correct tax number but the wrong name, and she can include a PNL or an income statement showing that she already properly reported the income under her business. 

[thenextstepp]

Yeah the 1099 has her tax number and my name on it.  The situation gets even more convoluted according to the discussion I just had with the client.  The "checks" (direct deposited to our account) were also written in my name which I guess is why they made the 1099 the way they did.  I've told them we need to correct the form but they don't seem very interested in doing so.  Would I handle it the same way or could I simply add it as "other self-employed income".  

[Carl]

it has the correct TIN number but it was issued in my name

What really matters also, is whose SSN is tied to that EIN. It can only be one of you and it "should" be the business owner.

[thenextstepp]

Yeah the EIN/TIN (whatever they're calling it now 🙄) is 100% setup correctly.   It's setup with her SSN and she's definitely the owner as I've got myself spread thin enough as it is.  

[Opus 17 · Accepted solution]

If the income was intended for your wife, it’s her business income.  Enter it as other business income not on a 1099.  Keep records in case the IRS inquires.  If the TIN is accurate, they probably won’t think it is your income, but she may need to prove she included the income even though she didn’t include the 1099. 

potentially she could also just enter the 1099 as if it was in her name.  I don’t know what the IRS computer would do in that case, though.  I imagine the TIN would control over the name, but I’m not positive.