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russell1
New Member

My wife is on sales and after getting paid on commissions she had to pay back the money she made due to the people canceling the product. How do we write off this loss?

 
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kerriP
Level 1

My wife is on sales and after getting paid on commissions she had to pay back the money she made due to the people canceling the product. How do we write off this loss?

If the amount of her commission reported to her on a 1099 or some other form is the Gross amount before she paid back her commissions, and she included that amount as Gross Income, then she should deduct the paid back commissions as an expense or as returns and allowances.  

If her Gross comission does not include the paybacks, then there is no deduction because it was never included in income.  Example:                        Commission  $10, 000 ,  1099- issued for $10,000         Payback       $500

                                 Reporting:                        Sales               $10, 000  

                                                                           Less:  Returns:      -500  (or expense)

                                                                            Income               $ 9500


If on the other hand, she got a 1099 for  Net   $9500,  there would be no  returns as shown above., because the $9500   already reflects the returns.                                   

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1 Reply
kerriP
Level 1

My wife is on sales and after getting paid on commissions she had to pay back the money she made due to the people canceling the product. How do we write off this loss?

If the amount of her commission reported to her on a 1099 or some other form is the Gross amount before she paid back her commissions, and she included that amount as Gross Income, then she should deduct the paid back commissions as an expense or as returns and allowances.  

If her Gross comission does not include the paybacks, then there is no deduction because it was never included in income.  Example:                        Commission  $10, 000 ,  1099- issued for $10,000         Payback       $500

                                 Reporting:                        Sales               $10, 000  

                                                                           Less:  Returns:      -500  (or expense)

                                                                            Income               $ 9500


If on the other hand, she got a 1099 for  Net   $9500,  there would be no  returns as shown above., because the $9500   already reflects the returns.                                   

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