topic Reporting taxes for splitting commission in Deductions & credits

Reporting taxes for splitting commission

RT777 — Fri, 20 Nov 2020 11:51:07 GMT

My wife is doing a little real estate work and starting to work with another realtor, but using her license so she’ll be receiving the full commission, but will be passing a good amount of it off to the partner. How would we report it for taxes later? Would it be a 1099-MISC to the the partner? Or would that be consider under schedule c (line 10)? I want to make sure we’re only paying tax for only the amount we kept. I believe it’s a 1099-MISC correct, but wanted to confirm?

Re: Reporting taxes for splitting commission

Critter-3 — Fri, 20 Nov 2020 12:54:37 GMT

ALL the income will be reported on her Sch C and then she issues a new form 1099-NEC for the commissions she pays to others so she can take the deduction.

Re: Reporting taxes for splitting commission

Carl — Fri, 20 Nov 2020 15:04:16 GMT

starting to work with another realtor,

This sounds like the start of a partnership to me. If this will continue to "grow" as a partnership I would highly suggest seeking the services of a CPA. Especially if the state of either partner taxes personal income. A partnership generally files a 1065 Partnership return. When you have a business owned by 2 or more persons, then treating it as and filing it as a partnership can usually make things easier and simpler on the tax front. But you should seek the advice of a CPA or other tax professional in your locale on this since you can share more detailed information about your setup in person, than you might be willing to share in this public user-to-user forum.

Re: Reporting taxes for splitting commission

RT777 — Fri, 20 Nov 2020 17:00:41 GMT

Thank you. Sorry if I mislead with partner, wasn't sure what to call it accurately, but this would be maybe a hand full of times so I should just say it would be with another realtor. So it sounds like it'll be a 1099-NEC from the other reply, but would check with CPA.

Re: Reporting taxes for splitting commission

Carl — Fri, 20 Nov 2020 19:30:18 GMT

It would more likely not to be misunderstood (as I did) if you referred to them as a sub-contractor instead of a partner. That removes doubt about any type of partnership that way.