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Statutory employee receives real estate commission from sale unrelated to employment, brokerage is the same entity as employer, should commission be taxed as reg. payroll

 
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2 Replies
pk
Level 15
Level 15

Statutory employee receives real estate commission from sale unrelated to employment, brokerage is the same entity as employer, should commission be taxed as reg. payroll

@sadie-glory , the term "employee" as in statutory employee implies  that the income be treated as wages  and as  such  FICA, Federal and State taxes should be withheld by the employer . If the employer ( perhaps in error ) issues a 1099-NEC, then the FICA/SECA  ( plus  Federal and State is your responsibility ).   Note that it is to your advantage  for the employer to consider  this as wages , since then  you pay only half of the FICA/SECA taxes  while the employer pays the other half ( for 1099-NEC  it is all your to pay ).

 

Does that make sense ?

 

pk

TomD8
Level 15

Statutory employee receives real estate commission from sale unrelated to employment, brokerage is the same entity as employer, should commission be taxed as reg. payroll

"...real estate commission from sale unrelated to employment"

 

Since the commission was unrelated to the taxpayer's employment, it should be reported in Box 1 of a 1099-NEC as Nonemployee compensation.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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