I received a 1099-misc form with incorrect information

[VolvoGirl]

What's wrong with it?  Why did you get it?  Is it for self employment income?  Is it too much?  

[T-M]

I appreciate it very much that you replied to my question.  I did not do my 2017 taxes for the IRS and they sent me a letter with fines enclosed saying I must respond by the end of this month, either by paying the fines and the amount they claim I owe, or submitting my completed tax form.  I am self employed and received 1099-MISC forms for work I did as a vendor for a nursing home and a music therapy institute that I do per-diem work for.

Originally, I was a full time employee as a music therapist at the nursing home but in 2017, the nursing home was sold as a nonprofit organization to a for-profit company.  Due to the sale and transition of the nursing home, I did not get paid for all the work I did at the nursing home from April through June of 2017, being owed over $7,000 dollars for that time.  I billed the music therapy organization with invoices but they claimed that the nursing home was responsible for paying me and the nursing home said that the music therapy organization that I submitted my invoices to was responsible for reimbursing me.

Then, I received a 1099-MISC form from the music therapy organization for about $10,500 which was much less than the approximately $16,000 from checks that I received from them during 2017.  The music therapy institute then sent me another 1099-MISC for about $16,600 for the year 2017.  I also received a 2017 1099-MISC from the nursing home for about $6,000, about $400 less than what I received from them in checks during the 2017 tax year.  

The IRS taxed me for the two music therapy institute invoices but did not include a 1099-MISC form from the nursing home for 2017 in the reported income the IRS had on file for me during that year.  I also have always filed my taxes in the past jointly with my wife who is a homemaker but does not earn any income.  The IRS did my 2017 taxes with my filing status as married filing separately from my spouse.

I purchased Turbo Tax for tax year 2017.  Can you tell me what I should do about the discrepancies in all the 1099-MISC forms that the IRS received for tax year 2017?  The more unfortunate problem is that I only have until the end of July for the IRS to receive my 2017 tax return.

Thank you.

[BMcCalpin · Accepted solution]

From what I see so far, you should do the following:

1. File as married filing joint. It is quite unlikely that filing married separate would be better for you two. The fact that your spouse earned no money is not a reason to file separate unless you have an unusual situation.

2. It appears that the music therapy organization sent you two 1099-MISC forms: a wrong one and then a corrected on (for about $16k). The company may or may not have remembered to check the "Corrected" box at the top of the second form. If they did not check the box, this is likely the reason that the IRS taxed you on both 1099-MISCs, because the IRS had no way of knowing that the first 1099-MISC should have been superseded by the second one.

3. The nursing home sent you a 1099-MISC that was approximately correct.

4. Did the IRS letter ask you to send the 2017 tax return to a particular agent or office (as opposed to the general address for your region)? I would recommend replying to their letter with the explanation that (1) the first 1099-MISC from the music therapy company of $10,500 was incorrect, (2) the second 1099-MISC of $16,600 should have been marked as "Corrected" but was not, and (3) there was another 1099-MISC of $6,000 from the nursing home that the IRS may not have. Add your tax return itself if the letter asked for it.

5. Complete your 2017 return in TurboTax using the second 1099-MISC from the music therapy company (of $16,600) and the nursing home 1099-MISC of $6,000. Don't enter in TurboTax the first incorrect 1099-MISC of $10,500.

6. Also, with the letter, include copies of the two correct 1099-MISCs (the IRS evidently doesn't have a copy of the nursing home 1099-MISC), as well as a copy of the incorrect 1099-MISC (mark on it that it should have been superseded by the second 1099-MISC was that should have been marked as "Corrected" but wasn't).

I am mildly concerned that you say that the 1099-MISCs are not exactly the same as what you were paid; however, the two I have pointed out appear to be approximately correct, and you don't have time at the moment to haggle with either company to get really really correct ones.

It appears from your description that you will owe only self-employment tax anyway, so this is likely to satisfy the IRS, at least for the time being. Good luck with it.

[T-M]

Thank you very much for all the information you gave me concerning the discrepancies with the 2017 1099-MISC forms that I received.  I feel much better now by following  your advice to complete my 2017 taxes and sending the returns to the IRS along with a letter to explain the discrepencies.  I spent a lot of time trying to call the IRS last week to ask them for advise and I couldn't even get through to talk with someone who could help me.  I appreciate your thorough response to my question which was very very helpful.