Google Adsense payment went to SSN but should have been set up for LLC partnership...

[bmccart]

My son has an LLC partnership with two others. When setting up the Google Adsense account for their business he mistakenly put his SSN rather than the EIN for the LLC. He is in the process of fixing this for any future payments but what can he do to report the earnings as business income and not his personal income as the money belongs to the partnership. The payment was deposited directly into their business account and has only been used for business expenses. Is there a way to fix the original tax information and receive a corrected 1099 after the payment has already been made? Trying to avoid him having to file it as an individual which may now require self employment estimated taxes and the income only attributed to him. 

[JotikaT2]

If possible, he should try to reach out to Google Adsense to see if they can confirm all payments will be reported as being under the LLC's identification number instead of his SSN.  Assuming this is for 2024, no tax forms have been mailed out yet and therefore, the company may be able to correct the error so all payments are reported under the LLC when Form 1099-NEC is issued.

If this is related to 2023, he can request that the company issue a corrected 1099-NEC form to show no amounts being reported to him and then issue a new 1099-NEC for those payments under the LLC's identification number.  If he has already filed the partnership and personal returns, he may need to file amended returns to reflect any corrections made on Form 1099-NEC.

As a last resort for 2023, another option is to report the 1099-NEC on his personal return as it is reported under his SSN, and then show a corresponding reversal of the income on his 1040 with a description that the income is being reported by the LLC and include the LLC identification number so the IRS can cross reference the amount to ensure it is being reported on the LLC return.

[Opus 17]

Clearly, the income must be reported as partnership income on the partnerships's form 1065 return, even if the partnership is not issued a 1099 of any kind.

If this is for 2023 taxes, your son can request the 1099 in his name be cancelled and re-issued.  If that fails, then your son has 3 options.

a. File by mail. Leave the income off the return.  Attach a copy of the 1099 and a written explanation. (Don't send detailed proof, but keep records in case of followup.)

b. Ignore the income. (The IRS may send a bill for taxes for the missed income, he would reply with a letter of explanation and a copy of his proof.)

c. Add the income, then zero it out with a negative offsetting entry.  (The IRS may send a request for clarification, he would reply with a letter of explanation and a copy of his proof.)

[M-MTax]

This can be handled by your son as a nominee recipient. 

Nominee/middleman returns.

Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the IRS Submission Processing Center for your area. On each new Form 1099, list yourself as the “payer” and the other owner as the “recipient.” On Form 1096, list yourself as the “Filer.” A spouse is not required to file a nominee return to show amounts owned by the other spouse. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.