topic Are travel agent commission payments considered commission payments or independent contractor payments? Not sure where to put them. in Get your taxes done using TurboTax

Are travel agent commission payments considered commission payments or independent contractor payments? Not sure where to put them.

Anonymous — Wed, 16 Dec 2020 17:50:42 GMT

I own a travel agency. I have travel agents that sell under my license (i.e. independent contractors). They earn a commission from their sales. The vendor pays my agency. I, in turn, pass that money to the agent. Do I capture these payments as commission payments in turbo tax or an independent contractor payments? I know I have to issue a 1099 for agents that earn at least $600 to. Thanks!

Re: Are travel agent commission payments considered commission payments or independent contractor...

DanielV01 — Wed, 16 Dec 2020 18:39:24 GMT

These would technically be Independent Contractor payments. They are included in payments you are making to independent contractors for whom you are issuing a Form 1099 to report the income. If you don't differentiate on the Form 1099 the commissions from the other contract work, then you do not need to do so on Schedule C, either. A commission on Schedule C is slightly different than sales commissions paid to contractors. Those commissions could be broker's commissions (or similar) which are not reported with other income on a Form 1099 and are not included in purchase price of inventory.

Having said this, what the IRS really wants to make sure of is that you have properly included the commissions paid on the Form 1099.

Re: Are travel agent commission payments considered commission payments or independent contractor...

Anonymous — Thu, 02 Jun 2022 12:47:33 GMT

For tax year 2021, I used 1099-NEC (box 1) to report commission payments to travel agents. I still don't think I'm doing it right. I'm wondering if 1099-MISC (box 3) would be a better choice. What are you thoughts/suggestions?

Re: Are travel agent commission payments considered commission payments or independent contractor...

TomD8 — Thu, 02 Jun 2022 13:45:19 GMT

@Anonymous --

TurboTax has a help topic on this:

https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn

Re: Are travel agent commission payments considered commission payments or independent contractor...

Critter-3 — Thu, 02 Jun 2022 14:10:44 GMT

@Anonymous

You MUST use the 1099-NEC for all contract labor you use and they must report it as earned income subject to the SE taxes. The box 3 of the 1099-misc is NOT correct ... read the instructions for that form: https://www.irs.gov/instructions/i1099mec