My wife works for the World Bank and is a US Citizen. She received a 1099MISC but we need to report the income as wages on line 1 of the 1040 form. How do we do that?

[Bsch4477 · Accepted solution]

As a US citizen she does have to pay payroll tax on that income so she has to report it on Sch C. 

[1960gwbegin]

We know that she has to pay taxes and we made estimated tax payments; however, if we report it on the self-employment line the form automatically applies estimated expenses against the income and we can not take those expenses.  The Bank stated we needed to claim the income as wages not self employment income.  We need to do a Schedule C and a Schedule SE, but on the SE we claim no expenses.  The question is, how do we claim the 1099MISC income as wages?

[Anonymous]

you can't.  a 1099 misc is for income other than wages.  if the payment was for wages, then the bank messed up and will have to correct it.   what box  has an amount in it.  

[pk]

Here is the IRS instructions -- this is only applicable for US citizens/Resident( GreenCard ) and only when residing in the USA:

If you are a U.S. citizen working in the United States for a foreign government or international organization, you must report this compensation as wages on Form 1040 and pay self-employment tax on the compensation under the Self-Employment Contributions Act (SECA). Self-employment tax is computed on Schedule SE, Self-Employment Tax, and is also reported on Form 1040. Although you are subject to self-employment tax on this employee compensation, you are not "self-employed" for any other federal tax purposes. You may not claim deductions for expenses on Schedule C and are not qualified to establish a Simplified Employee Pension (SEP) Plan and there is no allowable deduction for contributions to any such plan. Rules of contributing to SEP/IRA plans are explained in IRS Publication 560, Retirement Plans for Small Business, and Revenue Ruling 73-384 for additional information.

So the easiest way is to report the 1099-MISC on schedule-C just the gross income and no expenses.  So it would compute the SECA properly and transfer everything to form 1040.  I think some of the international organizations compensation may be exempt from Fed and Sate taxes ( but SECA is required) while for others  they do withhold federal taxes. But I believe World Bank is one of those covered by executive order .

[pk]

Once you enter schedule-C, it will automatically move thigs to the correct places -- will show as income  subject to federal and state taxes  but not on wages line  , that is all -- the effect is the same -- you pay the federal , State and the SECA