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Author: soccerboy One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121438  
Subject: 1099 income Date: 4/5/2011 12:09 AM
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My daughter worked in 2010 for several different employers. She got W2's from all except one and they were going to use a 1099 instead of W2.

The 1099 company paid her about $500 in 2010 and deferred her last pay check (approx $120) from December to Jan 2011. She also did some work in Jan 2011 and may do more work there later in 2011. They said that they did not have to issue a 1099 for 2010 since they paid her less than $600 and they'd put both the 2010 and 2011 income on the 1099 they'll issue for 2011.

She has to file for 2010 since she had W2 income from the other employers. Does she ignore the "1099" income earned in 2010 and show it next year on her 2011 tax return? Or does she have to report it as 2010 income even though the employer will not is putting it on her 1099 for 2011?

Hope that's clear! Thanks in advance.
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Author: soccerboy One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112977 of 121438
Subject: Re: 1099 income Date: 4/5/2011 12:13 AM
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Sorry, last sentence should have said:

Or does she have to report it as 2010 income even though the employer is putting it on her 1099 for 2011?

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112979 of 121438
Subject: Re: 1099 income Date: 4/5/2011 12:21 AM
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My daughter worked in 2010 for several different employers. She got W2's from all except one and they were going to use a 1099 instead of W2.

The 1099 company paid her about $500 in 2010 and deferred her last pay check (approx $120) from December to Jan 2011. She also did some work in Jan 2011 and may do more work there later in 2011. They said that they did not have to issue a 1099 for 2010 since they paid her less than $600 and they'd put both the 2010 and 2011 income on the 1099 they'll issue for 2011.

She has to file for 2010 since she had W2 income from the other employers. Does she ignore the "1099" income earned in 2010 and show it next year on her 2011 tax return? Or does she have to report it as 2010 income even though the employer will not is putting it on her 1099 for 2011?

Hope that's clear! Thanks in advance.


She is required to report all of her 2010 income on her 2010 return regardless of whether the employer issues a 1099-MISC or not. A 1099 "employee" is actually a self-employed independent contractor. As such, she can deduct her reasonable and customary expenses from the amount she received before paying tax on the balance. See Schedule C and the related instructions. (The final 2010 payment which was deferred to 2011 is considered 2011 income since it wasn't paid until 2011.)

Finally, this employer cannot combine her 2010 and 2011 earnings on the 2011 1099-MISC. They can only report their 2011 payments to her.

Ira

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112980 of 121438
Subject: Re: 1099 income Date: 4/5/2011 4:41 AM
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My daughter worked in 2010 for several different employers. She got W2's from all except one and they were going to use a 1099 instead of W2.

Why? How is the situation appreciably different with the 1099 outfit? People don't seem to realize that this isn't dealer's choice, but a matter of law. Granted, it's hazy law missing some bright lines, but law nonetheless.

In today's economy it behooves any person looking for work to bone up on the difference between employees (W-2) and independent contractors (1099). A starting place is the discussion in IRS Publication 15 and Form SS-8. A lot of employers misclassify workers to save themselves money.

The 1099 company paid her about $500 in 2010 and deferred her last pay check (approx $120) from December to Jan 2011. She also did some work in Jan 2011 and may do more work there later in 2011.

What do you mean "deferred" her paycheck? Past when she should have been paid? And she still wants to work for them? If it's just the usual situation that work late in December is compensated in January there's no problem, but if they're not paying on payday this is a red flag.

They said that they did not have to issue a 1099 for 2010 since they paid her less than $600 and they'd put both the 2010 and 2011 income on the 1099 they'll issue for 2011.

They're half right. They don't have to issue a 1099 for less than $600, but they cannot lump two years together on one 1099.

She has to file for 2010 since she had W2 income from the other employers. Does she ignore the "1099" income earned in 2010 and show it next year on her 2011 tax return? Or does she have to report it as 2010 income even though the employer is putting it on her 1099 for 2011?

She reports the $500 she received in 2010 on her 2010 return, Schedule C of the 1040. If it turns out that this really should have been W-2 wages, get back to us for the alternative way of dealing with this. But in no case does it go on her 2011 return when it was paid in 2010.

Phil
Rule Your Retirement Home Fool

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112984 of 121438
Subject: Re: 1099 income Date: 4/5/2011 12:59 PM
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She reports the $500 she received in 2010 on her 2010 return... But in no case does it go on her 2011 return when it was paid in 2010.

In the OP it sounded like that company is going to report the $500 received in 2010 on her 2011 1099. If they go ahead and actually do that, shouldn't she be thinking about getting her paperwork in order now to be ready to answer the question "Why is $500 from your 2011 1099 not showing up on your 2011 return?"

The answer will be, of course, "Because I earned it in 2010 and declared it on my 2010 return." She better be able to prove it, right?

--fleg

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