MargaretMort Posted March 2, 2011 Report Posted March 2, 2011 Client is outside salesman. Won two contests from two different companies represented by the business--is not self employed. The 1099-s are both with income in Box 7 instead of Box 3. I want to put the amounts on Line 21 as other income. Is there a way I can show the 1099-Misc with Box 7 and tell it to put it on Line 21? I know I can just enter the amounts as other income but expect the IRS will be looking for a Sch C. Thanks in advance, as always. MM Quote
jainen Posted March 2, 2011 Report Posted March 2, 2011 >>the IRS will be looking for a Sch C<< Get a power of attorney on file with IRS, and tell the client to send you the IRS letter as soon as it comes this summer. You'll have more success phoning the IRS than calling the company. Quote
Maribeth Posted March 2, 2011 Report Posted March 2, 2011 Put both 1099's on a Sch C-EZ, take a corresponding deduction for amounts properly reported on line 21, then put the spiffs on line 21. Maribeth Quote
kcjenkins Posted March 2, 2011 Report Posted March 2, 2011 I'd put it on Line 21, with a clear explanation, "Form 1099Misc from [EIN here] for SPIFF, box 7 used in error" Quote
samingeorgia Posted March 2, 2011 Report Posted March 2, 2011 To play Devil's Advocate: isn't the salesman in the "trade or business" of sales? If so, shouldn't it go on Schedule C? Quote
kcjenkins Posted March 2, 2011 Report Posted March 2, 2011 No, he's in the business of being an employee, and these payments, to be Spiffs, must come from some one other than his employer. The law just recognizes that when an employee of Company A gets paid an Incentive Prize, under whatever name, from Company B, which has no relationship to Company A except that Company A sells the products of B, it is not self-employment income, and while it is taxable, it is not subject to SE tax. Quote
Cathy Posted March 2, 2011 Report Posted March 2, 2011 >>the IRS will be looking for a Sch C<< Get a power of attorney on file with IRS, and tell the client to send you the IRS letter as soon as it comes this summer. You'll have more success phoning the IRS than calling the company. Brilliant idea, j!!! Rather than comtemplating the "what ifs" later down the road, I'm going to incorporate your suggestion on such cases before hand rather than after the fact. Cathy Quote
MargaretMort Posted March 2, 2011 Author Report Posted March 2, 2011 I knew there was a simple way to do this. I will follow KC's suggestion and maybe get a POA if necessary. Sure wish the companies would get this right in the first place. Again, my sincere thanks. MM Quote
grandmabee Posted March 2, 2011 Report Posted March 2, 2011 and if you file the POA now you should get a copy of the first letter. Quote
jainen Posted March 3, 2011 Report Posted March 3, 2011 >>I will follow KC's suggestion << Personally I never feel comfortable doing that. Apparently it works okay, but it means signing a return I know is not factually correct. Quote
kcjenkins Posted March 3, 2011 Report Posted March 3, 2011 But it is 'factually correct'. It's the 1099 that is factually incorrect. Quote
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