I am an independent contractor paying rent for a space and paying owner 50% of my sales. She gave me her 1099. Now what do I do?

[simplyswt117]

The owner pays me 10% of what I sell in product 

[DianeW · Accepted solution]

This income will be reported on Schedule C, Sole Proprietor, for the income you received from sales and commissions.  The rent you paid will be a business expense.  

Report all the income you received whether from your own sales and/or commissions you received from the owner for product sales. You can use any expense that was directly related as well as ordinary and necessary for you to produce your business income.

The cost of goods is your product for resale.  Inventory is the cost of items that remain unsold/still sitting on the shelves at the end of each year.  Purchases are the products/items purchased in 2017 for sale to customers.

The purpose of inventory and/or cost of good sold is that the IRS does not allow items that have not yet been sold to reduce the income received during the year from other products.  The ending inventory should reflect only items on the shelf that were not sold on December 31st.

Example:  You begin with your inventory from the end of the prior year, then add any items purchased, remove the cost of any items take for personal use and inventory that remains on the shelves unsold at the end of the year.  The balance will be the cost of the items that were sold to offset the business income received for those items, before the necessary operating expense such as rent, utilities, etc.

Check the image by clicking to enlarge and view.  TurboTax will calculate it correctly.

This can be completed in TurboTax, after signing into your return by following the steps below.

1. Click "Take me to my return"
2. Select the "Federal"  in the black navigation panel on left
3. Select Income & Expenses at the top
4. Select Self Employment Income and Expenses
5. Follow the screens to enter your business income and expenses 
6. Enter your 1099* or you can choose to use "Additional income and other income"
7. Click the images attached to enlarge and view for assistance.

* Assumes the Form 1099-MISC is provide to you, in your name and social security number or employer identification number (EIN) from the owner. If not, use the second option noted.

[simplyswt117]

This helps so much, Diane, thank you! One other thing. The owner says I need to 1099 her. What is the best way to do that?

[simplyswt117]

This helps so much, Diane, thank you! One other thing. The owner says I need to 1099 her. What is the best way to do that?

[DianeW]

@simplyswt117  You're welcome!  You can do that through the Quick Employer Forms in TurboTax without an additional fee.  This question will be asked in the business section so watch for it. When you say you need to complete a 1099, it will launch the site for you.

[simplyswt117]

Awesome thanks again!