Unreported 1099 Income

[JeanJ]

Kid is 26 and now filing for 2006, 2007 and 2008 as self employed. He's now painfully aware of the difference between an employee and a sub.

He will owe about $9000 total, mostly in SE tax for those three years. He's due a refund of about $1000 for 2009, of course it will be applied to the balance. He was an employee, per IRS regs, but he does not want to make waves for his employer, who issued the 1099s. (friends)

He has no assets and will have to set up an installment agreement.

File all 3 years ASAP?

Attach a letter to each return asking to forego penalties?

What's the best course of action?

Thanks

[kcjenkins]

File each year separately, IMHO. You can send them all at the same time, just send them in different envelopes, so none get stapled to the back of the top one and overlooked. Don't waste time writing letters with them, they will not be read by the people processing the return. You can attach a request to waive penalty to the 2210, but that will probably be ignored too. Once he gets a letter from them asking for payment, that is when you can request the waiver from someone with the power to process the request. As soon as he gets the bills from the old returns, do ONE 9465 covering all years.

[RitaB]

You might also make him aware that half of that SE and all of the income tax would have been withheld from HIS money if he had been paid as an employee. Might make him hate his friends less. LOL.

(Subs get it in their minds that ALL that tax was owed by the provider of the job.)

[GeneInAlabama]

You might also make him aware that half of that SE and all of the income tax would have been withheld from HIS money if he had been paid as an employee. Might make him hate his friends less. LOL.

(Subs get it in their minds that ALL that tax was owed by the provider of the job.)

Good point!

[michaelmars]

I disagree, i would put all in the same envelop, maybe even call the irs first so that you havea name to send the returns [or copies too] I assume 1099's were never issued or the irs would have found the kid first. tell them you have a first time filer who didn't understand the requirements and now wants to come clean, besides the taxes he has your fees too. if you get to the right agent they can accept the returns and stop the penalties. this has worked for me when the kids first take over the tax requirements for their aging parents. the big thing is you coming forward before they found him.

[cat1]

]DEDUCt, DEDUCT!,

[Janitor Bob]

You may want to call the taxpayer advocate and run this through them...They may assign an advocate and open a case and have you send the returns to them (taxpayer advocate) so they can send in a more personal manner to someone at IRS for processing.