It depends. If you are saying that the 1099-NECs are income from the service and business of the partnership, then the income should be included with other income that is reported on the Form 1065. This would reflect the correct profit on the K1s and you would not duplicate it on your personal return.
- If this is the case and if the 1099-NECs were reported in your personal social security numbers (SSNs) and not the EIN of the partnership you can nominee that income to the partnership using the information below, so the IRS is looking for the income on the right tax return.
Nominee Returns.
Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received). You must also furnish a Form 1099 to each of the other owners.
File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)
- On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer. The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.
The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:
Unlikely and incorrect scenario:
If you are saying the partnership is paying you and reporting the payments on Form 1099-NEC, then the partnership would have written off that expense and the partners would have to claim that income on their personal returns. They would also report their portion of the net profit from the K1.
@mattdabbs
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