What reporting & tax differences exists when a former employer reports income via 1099 using an Ind. Con. SSN vs. the EIN of the S-Corp they established during that year?

Matt---Kelly-Kelly · ‎June 4, 2019

I worked as an independent contractor with a real estate company in Florida in 2017. In September of 2017, I filed the paperwork and successfully established a sole proprietorship (PA: Professional Association) with an effective started date of January 1, 2017. I'm wondering what are implications if my former employer reports part or all earnings using the SSN instead of the EIN (earnings were about $80K, 2/3s of which was paid out prior to filing the paperwork). If the employer's reporting method is improper, or there are negative consequences for either party, what are the workarounds or recourses for the new business? It seems it should be reported via the EIN given the incorporation date. I've tried to research this, and wasn't arriving at an answer. Your help is much appreciated!!

DoninGA · ‎June 4, 2019

Did you or will you be receiving a W-2 or a Form 1099-MISC for the income? When you say employer that indicates you were an employee and not an independent contractor. An employee would receive a W-2.

Matt---Kelly-Kelly · ‎June 4, 2019

DoninGA, I misused used the term—Carl mentioned the proper term for our relationship: payor/payee. I will receive a 1099-Misc for the income. Thanks for your support!

Matt---Kelly-Kelly · ‎June 4, 2019

Carl, I saw your response in another related post, but wasn't sure if that was a general principal that applied to my situation (though it read that way there, too). The past payor has propositioned me to do something I don't want to do saying he will only consider using the EIN if I comply. Thanks for your support!

Carl · ‎June 4, 2019

When self-employed (and I am) never give your SSN to a contractor (kinda had to do though, if you're a real estate agent). They have no need for it. That's why you got an EIN.
If your SSN is stolen/abused, it affects your entire life. If the EIN is abused, it only impacts your business usually. It's much easier to cancel a compromised EIN, and it's darn near impossible to cancel an SSN.

Carl · ‎June 4, 2019

It doesn't matter if the payor used your SSN or EIN on the 1099-MISC they issued you. It still gets reported on the SCH C. The IRS issued you the EIN, and the IRS knows exactly what SSN that EIN is tied to. So that's why it doesn't matter.

TaxGuyBill · ‎June 4, 2019

I agree with Carl, as long your new PA is taxed as a Sole Proprietorship, it does not matter if the 1099-MISC shows your Social Security Number or EIN (at least for tax purposes).

Matt---Kelly-Kelly · ‎June 4, 2019

TaxGuyBill & Carl, does that mean the business name must be used on the 1099-MISC? The business name is Mathew Kelly, PA while my personal name is slightly different? Thanks, again for your continued support!

TaxGuyBill · ‎June 4, 2019

According to the Instructions for Form W-9, the name should be your personal name, and the EIN should be *your* EIN or SSN (not an EIN belonging to a PA or LLC or whatever).

"If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN."
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/fw9.pdf">https://www.irs.gov/pub/irs-pdf/fw9.pdf</a>

Carl · ‎June 4, 2019

The IRS doesn't care about the name (to a degree), so long as the SSN/EIN is correct.

TaxGuyBill · ‎June 4, 2019

@Carl Just like tax returns, the IRS computers match the SSN/EIN to the Name. So it is important that the Name matches the SSN/EIN, or the person that issues the 1099-MISC will receive a notice from the IRS.

For the OP, you are right, it doesn't really matter, but does matter to the issuer of the 1099-MISC.

Carl · ‎June 4, 2019

So long as the name is either the owner's legal name, or the business name used when applying for the EIN, I would *think* which is used wouldn't matter.

Matt---Kelly-Kelly · ‎June 4, 2019

@Carl & @TaxGuyBill, thank you both for your contributions! I greatly appreciate the clarity as it's allowed me to address this issue squarely. Cheers to you and keep going, guys!

Carl · ‎June 4, 2019

For payback, it's now your turn to answer questions. So when your taxes are completed, feel free to jump in!

What reporting & tax differences exists when a former employer reports income via 1099 using an Ind. Con. SSN vs. the EIN of the S-Corp they established during that year?

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What reporting &amp; tax differences exists when a former employer reports income via 1099 using an Ind. Con. SSN vs. the EIN of the S-Corp they established during that year?

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