My spouse's employer insists on issuing a 1099 for a car allowance when they also issue a W-2. I have spoken with their CFO, who insists that this is proper. However, all of my research confirms that it is not appropriate for them to issue a 1099 to a full-time employee.
Since they will not amend the W-2 or void the 1099, we must report it as income and pay all its taxes. I feel the employer is doing this to reduce their tax burden intentionally.
Am I wrong? What can I do to correct or report the situation?
My spouse is near retirement, so any impact of reporting to IRS or whomever would be negligible, even if they discovered who reported them. We wouldn't normally nitpick something like this, but it has a large effect on our taxes and I am frustrated and disappointed that this company would skirt taxes this way.
