1099 income for consulting - have to transfer to employer - how to report?

[ragnathor]

Hello,

I received income for consulting fees (non-employer) that will be in the form of a 1099. Due to a misunderstanding on my part, I have to pay the full amount to my employer. Do I report the 1099, and then if so how is the payment to my employer deducted? My income should essentially be my W-2 as if there were no 1099, but not sure how this is reported.

I have had someone filing my taxes in the past and we're hoping to do it on our own with TurboTax this year.  Thanks for the help.

[rjs]

You have to report the 1099-MISC income as business income. Report the payment to your employer as a business expense. That will make your net business income zero.

[TomD8]

<<that will be in the form of a 1099>>

If your employer corrects the problem now, he won't have to issue you a 1099-MISC.  1099-MISC forms aren't issued until January.

[Anonymous]

if you got the money in year 1 (say 2019)  but repaid in year 2 (say 2020)  you can not deduct the repayment in 2019.  there are special rules depending on whether the repayment was $3000  or more or not.  if this is the case post back in same thread so further guidance can be provided and also answer whether it was $3,000 or more   

[rjs]

@Anonymous  My reading of the original post is that the 1099-MISC income is not from the employer. It's from a third party. So it's not a repayment. The OP gets money from the third party and has to turn that money over to the employer, but the third party issues a 1099-MISC to the OP.

@ragnathor  Please clarify who is paying you the 1099-MISC income. Is it from your employer, or from someone else? My earlier reply above is based on my assumption that the income is from a third party. If it's from your employer you should not pay it back and have it included in your W-2. Instead you should file Form 8919 to report income on a 1099-MISC that should have been included in your W-2.

[ragnathor]

Thank you for the replies.

The 1099-MISC income is indeed from a 3rd party, separate from my employer. Both transactions (the 1099-MISC income and the payment to employer) will be the same tax year 2019. Amount is over $3,000 closer to ~$10,000.

[rjs · Accepted solution]

Since it's in the same year the amount doesn't matter. Do what I originally said. Report the 1099-MISC income from the third party as business income, and claim the payment to your employer as a business expense.