1099-misc

Forum|Forum|6 years ago
September 8, 2019
2 replies
11 views

my son had a business with a friend. They did contract work for a business removing and replacing motors. The company sent the payments to my son as he had his son on file from when he was employed by him previously. He sent my son a 1099-misc for the amount paid in 2018. My son left the business in the fall, but he still rec'd the 1099. How can this be corrected so he in not liable for the full amount?

Kat11_2

Alumni - Champ

The bottom line is that your son must indicate that he paid a portion of the money to his friend. He'll need to issue a 1099-MISC to his friend (should have been done in January) for the amount he actually paid his friend.

Your son, when he files his tax return, will need to indicate that a portion of the 1099-MISC income he has received was paid to someone else. Your son may wish to mail his return and include a statement to support why he's not paying taxes on the full amount. You "may" get by without a 1099-MISC if the payment to his friend was less than $600, and your son includes in his statement the name and SSN of his friend, and the amount that was passed on to his friend.

If you're unfamiliar with preparing and filing a 1099, you can use TurboTax Quick Employer Forms. However, using QEF does mandate that you're using TurboTax Self Employed Online or TurboTax Home & Business Desktop edition (CD/Download).

Please post back if you have further questions.

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*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***

Carl

Level 11

How can this be corrected so he in not liable for the full amount?

The bottom line is, your son *is* liable for the full amount. He will need to issue a 1099-MISC to the other individual for the amount that the other individual was paid, out of the full amount reported in box 7 of the 1099-MISC your son received. While your son will still report the full amount, only that portion that was paid to the other individual will not be taxable to your son.

Critter

Level 15

If they has a business together then they should have filed a Partnership return first before the personal returns AND the 1099 should have been in the name of the Partnership ... if this is your situation seek local professional help to fix all your issues.