Received 1099 with personal name instead of business name (S-Corp). How do I correct this?

[kent1]

We have received 1099s with the wrong name on them. They are made out to my wife but should be made out to her business. How do we correct this.

[PeterM]

It depends on whether or not the company will issue a corrected 1099-Misc to your wife. If they will, then just wait for the corrected 1099s and file as you normally would. If the company does not correct the error, then below are a couple of options...

1. You say that the 1099-Misc is addressed to your wife...does it have your wife's social security number printed in the box "Recipients Identification Number", or is the EIN of your wife's business printed there? If its the EIN of the business just include the income from the 1099s as you normally would with the business.
2. If the number in the "Recipients Identification Number" is your wife's social security number then combine the amounts from the 1099-Misc forms on Line 1 of Schedule C of form 1040. Then, in Part V of Schedule C...put this exact description "Nominee Income to xx-xxxxxxx (which is your wife's EIN for her business)" then the amount of the 1099 out next to it. Part V is for "Other Expenses" so you do not have to enter the 1099s as negative numbers. Do this for each 1099 that has her social security number printed in the "Recipients Identification Number". This shows the income coming in and going right back out without any tax consequence. The effect of (2) is to show the IRS that your wife recognizes the income, but that it belongs to entirely different identification number, thus the phrase "nominee income to xx-xxxxxxx".

The income must still be added to your wife's business as it normally should, don't forget this...



See updated information below...

• Log into your tax return
• Click the Federal Taxes tab
• Click the Wages & Income tab
• Under the Less Common Income heading, click the Miscellaneous Income 1099-A, 1099-C start button
• On the next screen, under the Miscellaneous Income heading, click the Other Reportable Income start button
• Click the Yes button that you had Other Taxable Income
• Enter the following for the 1099 description..."S-Corp Income from xx-xxxxxxx (use payer's EIN)"
• see 1st screenshot below
  
• Enter the amount of the 1099, and then click the Continue button
• Click the Add Another Income Item button
• see the 2nd screenshot below
  
• In the box for a 1099 description, enter the following "Nominee Income to xx-xxxxxxx (use your S-Corps EIN)"
• see the 3rd screenshot below
  
• Enter the amount of your 1099 as a NEGATIVE number
• Click the Continue button

This process will get the 1099-MISC onto your tax return, and it will show it backed out so you won't have to pay self-employment taxes on it. It will also keep you from having to upgrade to a different Turbo Tax.

Edited 2/13/2017 for additional info.
PMM

[kent1]

How do I have TurboTax make this change? As I work through he screens I have not found the opportunity to make this change to Schedule C.

[fanfare]

I don't think TurboTax Online will allow access to the Other Expenses section Part V.
You would have to use the CD/Download version.
But more importantly, this answer from @TurboTaxPeterM (option 2.) doesn't make any sense.

[PeterM]

I do sincerely apologize Kent1 and good catch Fanfare...I am going to edit my original answer on how to include the income on the Form 1040 without having to upgrade your Turbo Tax. Again, I am so sorry for the inconvenience.

[PAbernathyPWA]

Greetings Peter at @PeterM 

I have to revive an old post but I am in dire need of your assistance. Now, I do use the TurboTax (CD) version and have both the Deluxe for Personal and Business for my Chapter S Corp.

My issue is Pay Pal has issued me a 1099K in my SSN even though my Pay Pal account is clearly a business account and does contain an EIN. They will not change it or at the least are giving me the runaround. So I am not sure how I can include this on my return. I am sure they sent it to the IRS as required but it's $95.000 and was to be in our business name and business EIN as it is again business-related.

I know that if I just ignore the fact its got my SSN on it and file it as my business for my 1120S that when I submit my personal taxes the 1099K will show up and I will get the dreaded letter from the IRS saying I did not pay my taxes when in reality I did, just ran the 1099K through the business and generated a K-1 to include on my personal taxes, minus the business expenses of course.

So my question is how do I reflect this on my returns, what should I do to avoid any issues. Will your original explanation work for me as well and since I am using the CD version on the desktop rather than online will I have the same options to add the 1099K as a pass-through on my personal taxes to correct this issue. Also, everything is documented so it is truly a business-related income and not a personal-related income.

Any insight you can provide would be very appreciated.

[Irene2805]

Even though the 1099k should have been made out to your business, include it in your 1040 as Other Income using these steps:

1. Click on Federal > Wages & Income   
2. In the Less Common Income section , click on the Start/Update box next to Miscellaneous Income, 1099-A, 1099-C
3. On the Miscellaneous Income screen, click on the Start/Revisit box next to Other reportable income.  
4. On the Any Other Taxable Income? screen, click the Yes box.
5. Enter the income on the Other Taxable Income screen, along with a description.  Click Continue. 
6. You will be brought to the Other Miscellaneous Income Summary. 
7. If you have expenses to deduct against the income, you can make another entry as a negative number.  Just click the box, Add Another Income Item.

The income will appear on line 8 of Schedule 1 in your return.

[PAbernathyPWA]

@Irene2805 

Thank you so much for coming and assisting. If you do not mind I have a follow-up based on your steps.

I want the 1099K to pass through to my company rather than show it as an income to me directly, so do I not actually put the 1099K in as a negative somewhere?

I guess its 5, 6 and 7 I am still unclear of.

I do have other expenses for the business which will be reflected on my 1120S, but I am trying to PASS the 1099K on to my business so it can apply the expenses to the income but I guess I am having a disconnect (forgive me) in how to actually pass that through without it being considered to direct income on my 1040 for my personal taxes.

[Irene2805]

The 1099-K is not entered as an actual form in the return, like the W-2 or 1099-DIV or -INT.  So the IRS won't be matching it like they do with the other forms.  For example, the IRS receives a copy of the W-2 and they look at your return to see if you have the W-2 in your return.  They don't do that with the 1099-K since there is not a direct 1099-K entry in the 1040.

Because of this, do NOT enter the 1099-K income in the 1040.  Just enter it in your S-Corp return.

In the VERY unlikely event the IRS sends you a letter, just respond that you included it in your S-Corp return.  They are happy are long as income is declared somewhere and taxes paid on it.

@PAbernathyPWA

[kfuhster]

I have the same question, but it's a 1099 NEC with personal name instead of S-corp name, and I'm using TurboTax Home & Business - how do I remit this to the company? I tried following the steps in the original (edited) post but the versions seem to be different that it's not clear if it's the correct way.

[ThomasM125]

@kfuhster I think you mean you performed services for a business as an S corporation but they issued you a form 1099-NEC reporting the income in your name, not the corporation name. If they entered the corporation federal ID number as opposed to your social security number on the form, you just report the income on the corporate tax return and nothing else is required.

If they reported the income under your social security number, the best thing would be if they would correct it. If not, you can enter the income as self-employment income on your personal tax return, then enter an expense for the same amount, called Commissions so the two will cancel each other out. Then, report the income on your corporation tax return.

You could also just not report the form 1099-NEC and if the IRS sends you a notice about it later on, just send them a letter explaining that you reported the income on your corporate tax return.

[kfuhster]

Thanks, @ThomasM125. Yes, services were performed as a S-corp and the 1099-NEC was issued with SSN rather than the corp's federal ID. I have some follow-up questions.

Reporting the income on the corporation tax return, I just add the amount on the 1099-NEC to the ordinary business income (for this K-1 it shows up in both box 1 and 17) when reporting K-1? Everything else from the K-1 is reported as usual?

Reporting the income (and expense) on personal tax return - this is done in the "Business" section of Home & Business, correct? There's a section to report wages paid to other employees - this was already included when reporting the K-1, so do I just skip it here?

[ThomasM125]

The income should have been reported on the S corporation tax return. I was assuming you owned the S corporation, if so then you should have reported all income received, no matter how it was reported to you.

You could add it to the box 1 amount to have it included on your personal tax return though.

Yes, you would report it in the "Business" section of TurboTax. You wouldn't enter anything in the wages to other employees box.

[whoisgarrettjames]

Hello TT,

A similar scenario will apply to me this year (I received a 1099 in my personal name/SS# and not my business'). I was not able to obtain an updated 1099 and must follow this method first described above by @PeterM. I'd just like to know if these same steps are still applicable, or if there have been changes to the method since their initial response a few years back. 

Thanks!

[ZoltanB45]

Add the revenue to your business income. The IRS have seen this a lot and as long as the business revenue equals or exceeds the 1099's they received, you'll be fine in regards to that.