1099 misc, penalty?

[mimi]

my client hired help around the house while she was recovering from surgery and paid the helper >$600 so should have done a 1099-misc. client is under a lot of stress and said she didn't really want to deal with it right now. she was certain the helper was reporting the income on her tax return. what is the penalty for not submitting a 1099? and how likely is the irs to figure out she didn't do one? can we submit one after the 1099 deadline (i realize it has already passed), or will that draw unnecessary attention to the situation? thank you for your help!!!

[Yardley CPA]

my client hired help around the house while she was recovering from surgery and paid the helper >$600 so should have done a 1099-misc. client is under a lot of stress and said she didn't really want to deal with it right now. she was certain the helper was reporting the income on her tax return. what is the penalty for not submitting a 1099? and how likely is the irs to figure out she didn't do one? can we submit one after the 1099 deadline (i realize it has already passed), or will that draw unnecessary attention to the situation? thank you for your help!!!

Here's an article that may help shed some light on your question. Looks like penalties can get pretty pricey depending on the situation. Good luck.

http://www.ehow.com/about_5480896_penalties-filing-1099-misc-form.html

[rfassett]

There would be no 1099 requirement from the homeowner. Maybe a w-2 requirement (think nanny tax), but no 1099.

[JohnH]

I didn't understand the math on e-how.

10 x $50 is $500, and 10 x $100 is $1,000.

So where did they get their staement that the penalties could be in the "thousands" of dollars?

[mimi]

Thank you for all replies. I thought I remembered it being around $50. Yes, the person may have been an employee instead of independent, but I think it's too late to take that one on!

[grandmabee]

Thank you for all replies. I thought I remembered it being around $50. Yes, the person may have been an employee instead of independent, but I think it's too late to take that one on!

She probably under the limit for household employee anyway. just start 2011 the correct way

[kcjenkins]

It's not too late for her to do it right, if you prepare a Sch H for her, with a W-2 to the employee. That is the correct way, not a 1099, the employee was not self-employed, she was a household employee. And the Sch H is how you deal with it and avoid penalties.