1099-MISC Filed under the wrong SSN & Name

I am going to tell you what you must do legally. Although, I suspect you may not be interested in following these instructions if you are already trying to hide your partners income.

 

When you have a partnership with someone who is not your spouse, the partnership is required to report all of its income and expenses on a partnership tax return called a form 1065. When you prepare the form 1065 for the partnership, it will include a K-1 statement for each of the partners. Each partner includes the K-1 statement on their personal tax return. The K-1 statement shows each partner’s share of the partnership’s income and expenses, and are added to the partner‘s other income, deductions, and credits to create their final tax return.  The partnership income is not necessarily divided 50-50, it depends on your agreement between the partners and how much work each partner does for the partnership.

 

The partnership return form 1065 can only be prepared with TurboTax Business, which is a separate program from the self-employment version, and is only available as a download or CD to install on a PC; there is no Mac or online version. The partnership return is due March 15, not April 15, and the penalty for late filing is $195 per month per partner.

 

 

When I say partner, I mean girlfriend. We aren't in an actual business partnership or domestic partnership. All the income/money gained from twitch streaming is my own and not hers. She just help me set the account up. I am not trying to hide her income, the income is being reported under her when it's actually my income as the stream is mine.  We just put the wrong SSN & Name when we filled it out. 

I want to pay the taxes under my name in the rightful & just process. Infact I have to pay more tax by putting them under my name since it will put me in a higher tax bracket. I am not trying to commit any tax fraud. We simply put the wrong SSN & Name in January last year on the form and didn't realize. It's a basic clerical error.

I believe this is a 1099-MISC Type 1 or 2 Error?

 

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@Soharu wrote:

When I say partner, I mean girlfriend. We aren't in an actual business partnership. I am not trying to hide her income, the income is being reported under her when it's actually my income as the stream is mine.  We just put the wrong SSN & Name when we filled it out. 

I want to pay the taxes under my name in the rightful & just process

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I'm still slightly concerned by "helps me manage it."  If all the important business activities are yours and the other person does not "materially participate", then it can be your business alone. 

 

You report the business income and expenses on schedule C.  You are required to keep accurate records of your income and expenses and report them even if you don't get tax paperwork in your name.  

 

For your girlfriend, there are 2 suggested procedures, both of which could result in a followup letter from the IRS asking for proof.

1.  Your girlfriend lists the 1099s as income.  Then, she creates an item of "other income" that is a negative number that cancels out the income.  Add a reason like "1099 issued to wrong person" or something.  Then she goes ahead and e-files.

2. Your girlfriend does not list the 1099s.  She prints her return and files by mail, and includes copies of the 1099s and a letter of explanation that gives the important details: the payer was given the wrong number, the payer refused to issue a corrected 1099; the income should have been reported in your name; that you will be reporting then income on your return; and giving your name, address and SSN.  She should not use the word "partner" in her letter, and she should not describe herself as "managing" your business; either of those comments could cause the IRS to misunderstand the same way I did.

 

Because she can't e-file with #2, many people choose method #1 for this situation.  But #2 is recommended by the IRS.  In either case, be prepared for a letter from the IRS asking for more details.  You will want to save proof from the payer that they refused to issue a corrected 1099, as well as proof that you corrected it for the future, and proof that this is your business, not hers. 

Yes, to clarify. All she did was help me setup the twitch account. It's my own account and she does appear on the stream sometimes but that's because we live in the same room. She has her own separate twitch stream that she also pays her own taxes on that is already done correctly this year. Originally it was only a hobby, but the stream made too much for it to qualify as a hobby ($3700 in twitch donations)

Would this qualify as a 1099-MISC error Type 1 or Type 2?

Error Type 1

• Incorrect money amount(s), code, or checkbox, 
• A return was filed when one should not have been filed

 

Error Type 2

• No payee TIN (SSN, EIN, QI-EIN, or ITIN)
• Incorrect payee TIN
• Incorrect payee name

I plan on involving an actual CPA. I always do our taxes and file online, but I think because of this filing manually may be a better bet. 

Sorry I use the word partner because that's how we describe our SO's where I'm from. It's more elegant than just saying girlfriend I guess, I definitely see where the mistake comes from in a tax sense.

Also, it isn't as if the payer is refusing to issue a corrected 1099, they are telling me it's all automated and they do not have the ability to do so. I did take a screenshot of this message, they have no phone support for tax related problems so the only proof I have is there messaging system amazon.taxcentral.com 

The PayPal account where payments are received is 100% in my name, so I'm hoping that is enough proof.