1099 income signed over

[pamk7265]

I received consulting income that I signed over (the entire check) to our billing agency that is responsible all member income. They took their 20% and rest was added to my income and as such reflected in my W-2. I am therefore not adding 1099 listed income as additional income in my own taxes as it is encompassed in my W-2. Seems reasonable right?

[Anita01 · Accepted solution]

Enter the entire amount of the income as a payment to the agency in Other Expenses on the Schedule C., so the net is zero on the Schedule C.  You're just reporting the 1099-MISC and explaining why it's not taxable income.

[Anita01]

If you received a 1099-MISC for this income  in your name or your consulting company name, and the income appeared  in Box 7, the IRS will most certainly be expecting to see that income reported on your return.  You would need to file a Schedule C for the income, then use the Other expenses category to describe the payouts to the agency, in order to avoid a billing from the IRS for the income tax, Self-employment tax, plus interest and possibly penalties from the IRS in the not too distant future. 

[pamk7265]

So my billing agency took ~ 20% and then income was reflected in my paystub and taxed as normal. If I add 1099-MISC income to my tax-return I'm essentially being taxed twice on the income. I'll add the 20% as an other expense, but how can I figure out how much I was taxed on the income in my paystub (taxed same as other income) to add this as an expense also?

Also, just tried this and refund is definitely not as much as if I remove the income entirely. I don't see an "already paid taxes on this income" button in the other expenses! 😉