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speedway121
Level 2

Wife received $800 from business income. No 1099 received. business closed.

Wife did work in 2018 for a company thru her business X.

End of 2018, X shut down and closed operations, filed with the state of CA to close business. 

The customer paid X in 2019 for  work done in 2018.

X is cash based accounting.

 

Total for work was $800. 

Customer never sent a 1099. 

 

The customer has X's EIN number. 

 

Can I take the $800 and put it against my personal income? 

Am i forced to put it against a schedule C? I dont want to do it against a schedule C because its would raise questions since the company was closed in 2018. 

 

 

6 Replies
DaveF1006
Employee Tax Expert

Wife received $800 from business income. No 1099 received. business closed.

It doesn't matter if the business closed or not. You can report the income either with or without a 1099 MISC.  I would suggest reporting it as Business income without a 1099 MISC since you never received one and pay the taxes on the income just to cover your basis just in case if the company sent a 1099 MISC to the IRS.  By reporting it, you have tangible proof that you did your due dilligence by reporting this income even though you did not receive a 1099 MISC. Make sense? 

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speedway121
Level 2

Wife received $800 from business income. No 1099 received. business closed.

My question is not if I need to report it. 

 

I am asking if I can report it as personal income vs schedule c income. 

 

Irene2805
Expert Alumni

Wife received $800 from business income. No 1099 received. business closed.

Yes - Since the business was a sole proprietorship and has been closed, to avoid issues with the state of CA, go ahead and report the income as Miscellaneous Income, using the following 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 Let's Work on Any Miscellaneous Income screen, click the Start/Update box next to Other reportable income.
  4. On the screen, Any Other Taxable Income? click the Yes box. 
  5.  On the next screen, Other Taxable Income, enter a description and the amount.  Click Continue
  6. The amount entered will appear on line 7 of the 1040.

 

speedway121
Level 2

Wife received $800 from business income. No 1099 received. business closed.

Hello, 2018 Turbotax (thru their CPA line) mentioned it was better to report this on a Schedule C even if the business is closed.

 

2018 Federal Schedule C- the box to dispose of the business was not checked

2018 CA Schedule C- the box to dispose of the business was not checked

2018 CA Form 568 - NOTED it was a FINAL filing for the business.

 

The 1099 MISC (even though I didnt receive it) WAS reported against the EIN of the business as far as we were told. Company that paid us is out of business now. 

 

Question 1- Now, based on the above, Should I report this on Schedule C or Misc income? 

Question 2- In general. how does the IRS link a EIN from a business to a social security number, so they know IF I recognize the income as part of "other personal income", it is correlating with the business income, and so that it dosent raise flags that the income was never accounted for.

 

TO BE CLEAR, we are talking about $800 in income. 

 

AmeliesUncle
Level 12

Wife received $800 from business income. No 1099 received. business closed.

It was income from a business, so you need to report it on Schedule C.  It does not matter if the business was registered as closed, it is still business income.

 

If you do that, there will be no 'red flags' or anything else.  Just report it as business income.

KrisD15
Employee Tax Expert

Wife received $800 from business income. No 1099 received. business closed.

@speedway121

 

If you don't have expenses, you can use a Simple Schedule C which will save you the cost of purchasing TurboTax Home and Business or Self-employed, but yes, it should be reported as business income.  

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