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Fanged Lawn Wormy
Jan 4, 2008

SQUEAK! SQUEAK! SQUEAK!
I guess this is the place to ask.

I did some contract work for a guy last summer, generally getting about $300 a week. He has not sent me my 1099-MISC form yet. I have my doubts that he is going to. What are my options?

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AbbiTheDog
May 21, 2007

Pope Mobile posted:

Hmm, thanks for the info. The smart thing to do would be tightening my belt and paying it all off.

Shocking concept!

KennyG
Oct 22, 2002
Here to blow my own horn.

WrongWay Feldman posted:

I guess this is the place to ask.

I did some contract work for a guy last summer, generally getting about $300 a week. He has not sent me my 1099-MISC form yet. I have my doubts that he is going to. What are my options?

How much in total? Was he an individual or an individual operating as a business?

Assuming business:
Less than $600 doesn't require a 1099-Misc (you would just claim as schedule C or general misc on line 22 where appropriate) If you had more, you can file a substitute and explain the situation, but you have to also describe your attempt to get the form. I would tactfully (or hostily depending on your relationship with him) ask what his intentions are or if he is planning on submitting a 1099 for you. He should have sent it out by Feb 1 just like a W2. He may be thinking he is doing you a favor by not filing a 1099 for you (although he's screwing himself if he actually pays taxes).

As a person, he wouldn't have to file a 1099-MISC


Speaking of substitute forms, is there a way to file a 1099-T Substitute?

I misfiled for 2007 and am running out of amendment time. I would like to claim my student tuition for a Lifetime Learning Credit and get almost $2000 back. My school doesn't have 1099-Ts online before 2009. I requested the form a few weeks ago and it still hasn't come. I can lookup my Bursar statement and see what my payments were, but would that be sufficient to file for the credit?

AbbiTheDog
May 21, 2007

WrongWay Feldman posted:

I guess this is the place to ask.

I did some contract work for a guy last summer, generally getting about $300 a week. He has not sent me my 1099-MISC form yet. I have my doubts that he is going to. What are my options?

A) Be honest and report the income anyway, since that is what you're legally required to do.
B) Don't be honest and cheat on your taxes.

There you go.

CerebralDonut
Mar 5, 2004
Not sure if this is the right thread but here goes nothing. I just got my tax refund back, and uh I kind of hosed up while opening it. About a fourth of it is ripped. I searched google about what to do in this situation, but nothing useful came up. I'm sure this has happened to someone before, so I'm wondering -- What's the best thing to do in this situation? Should I call the IRS and explain the situation to them, or should I just mail back the ripped check with a note?

CerebralDonut fucked around with this message at 03:05 on Mar 11, 2011

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!

CerebralDonut posted:

Not sure if this is the right thread but here goes nothing. I just got my tax refund back, and uh I kind of hosed up while opening it. About a fourth of it is ripped. I searched google about what to do in this situation, but nothing useful came up. I'm sure this has happened to someone before, so I'm wondering -- What's the best thing to do in this situation? Should I call the IRS and explain the situation to them, or should I just mail back the ripped check with a note?

Tape it neatly and try to deposit it? Checks are processed via optical scanner these days, I think there is a pretty good chance that it will go through OK.

Your only other option is to call the IRS and ask them to re-issue the check, which will involve sending it back to them with a form you have to fill out and sign, and waiting for them to send a new one (which they will). This will most likely take several weeks.

ShadowHawk
Jun 25, 2000

CERTIFIED PRE OWNED TESLA OWNER
I did some contracting and the 1099-MISC form I was sent

1) has the wrong social security number
2) includes reimbursements as nonemployee compensation


Am I correct that 2 is a mistake? I shouldn't pay income taxes on money that was solely used to buy parts for a client.

Can 1 and 2 be fixed at the same time? I assume the client will have to file an amended form.

CerebralDonut
Mar 5, 2004

furushotakeru posted:

Tape it neatly and try to deposit it? Checks are processed via optical scanner these days, I think there is a pretty good chance that it will go through OK.

Your only other option is to call the IRS and ask them to re-issue the check, which will involve sending it back to them with a form you have to fill out and sign, and waiting for them to send a new one (which they will). This will most likely take several weeks.

Thanks, I'll give it a try!

Captain Beans
Aug 5, 2004

Whar be the beans?
Hair Elf

ShadowHawk posted:

I did some contracting and the 1099-MISC form I was sent

1) has the wrong social security number
2) includes reimbursements as nonemployee compensation


Am I correct that 2 is a mistake? I shouldn't pay income taxes on money that was solely used to buy parts for a client.

Can 1 and 2 be fixed at the same time? I assume the client will have to file an amended form.

1) Yea you want your employer to know they made a mistake so that they can file an ammendment to the IRS. Considering you were a 1099MISC I doubt they will even bother because most places I see are terrible at fixing anything for 1099MISC.

2)When you fill out your schedule C you will list those parts you buy as expenses so you reduce that income by the ammount you were reimbursed. You won't be paying tax on it.

Captain Beans fucked around with this message at 19:16 on Mar 12, 2011

Jose Cuervo
Aug 25, 2004
Two questions:

1) Does everyone who receives a 1099-MISC have to pay self-employment tax?

I have a scholarship that I get a stipend through (my only source of income, other than interest from a savings account); they withold no taxes and send me a 1099-MISC at the end of the year. Through the year I made 4 estimated tax payments based on the assumption that I was only paying income tax. However, I am now unsure as to whether or not I am considered to be self employed and need to pay self employment tax.

2) Does the income I get on the 1099-MISC count as earned income?

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!

Jose Cuervo posted:

Two questions:

1) Does everyone who receives a 1099-MISC have to pay self-employment tax?

I have a scholarship that I get a stipend through (my only source of income, other than interest from a savings account); they withold no taxes and send me a 1099-MISC at the end of the year. Through the year I made 4 estimated tax payments based on the assumption that I was only paying income tax. However, I am now unsure as to whether or not I am considered to be self employed and need to pay self employment tax.

2) Does the income I get on the 1099-MISC count as earned income?

If the income is reported in box 7 (non employee compensation) the IRS will presume that you are self employed. If it is listed elsewhere (most commonly box 3 - other income), then you may not be subject to SE tax.

Yes your net income from the 1099 is earned income if you are self employed.

Jose Cuervo
Aug 25, 2004

furushotakeru posted:

If the income is reported in box 7 (non employee compensation) the IRS will presume that you are self employed. If it is listed elsewhere (most commonly box 3 - other income), then you may not be subject to SE tax.

Yes your net income from the 1099 is earned income if you are self employed.

All the stipend is reported in box 3 (Other income), which is why I am unsure. The payer is the American Society for Engineering Education, but the scholarship is a government scholarship. I would not consider myself employed by either the ASEE or the agency administering the scholarship. Am I self employed because this is my only source of income and as a student I don't 'work' anywhere or for anyone?

Edit: From reading the handbook closely, I found the following information:

quote:

At year end, ASEE will provide you and the Internal Revenue Service
(IRS) with the informational Form 1099-MISC recording the amount paid to you during the tax
year. ASEE does not withhold taxes from your stipend payments. Under current laws and
regulations, you are responsible for submitting quarterly estimates of income taxes to the IRS
and paying the amounts due. You may have a similar liability with respect to state and/or local
taxes depending upon the state and/or locality where you reside.

and

quote:

During Phase 1 of the Program, Recruitment Participants are NOT employees of the Program and will NOT
receive a Form W2. The Program DOES NOT withhold taxes from monthly cash award payments, book
allowance, or internship support payments. However, cash award payments, book allowances, and
internship support payments ARE subject to income tax and ASEE WILL report all such payments to the
IRS.
Participants are personally responsible for withholding and paying taxes on cash award, book allowance,
and internship support payments. In some cases, Participants must submit quarterly estimates of
income taxes to the IRS and pay the amounts due. Participants may have a similar liability with respect
to state and/or local taxes.

So it seems to say I am responsible for income tax (nothing about self employment tax), but that I am definitely not considered an employee of the administering agency (Program). Any thoughts please?

Jose Cuervo fucked around with this message at 01:20 on Mar 13, 2011

Fanged Lawn Wormy
Jan 4, 2008

SQUEAK! SQUEAK! SQUEAK!

KennyG posted:

How much in total? Was he an individual or an individual operating as a business?

Assuming business:
Less than $600 doesn't require a 1099-Misc (you would just claim as schedule C or general misc on line 22 where appropriate) If you had more, you can file a substitute and explain the situation, but you have to also describe your attempt to get the form. I would tactfully (or hostily depending on your relationship with him) ask what his intentions are or if he is planning on submitting a 1099 for you. He should have sent it out by Feb 1 just like a W2. He may be thinking he is doing you a favor by not filing a 1099 for you (although he's screwing himself if he actually pays taxes).

Thanks. I was actually paid a few thousand over the course of the summer, but the last $600 was never sent; I'm sure I have to file on this. I've heard similar stories from others about this kind of thing too. I've sent a kind notice already, in a few days I may submit a more aggressive one.

Hartman
Dec 20, 2005
Blade Runner extrodinare
I have a question about the timing of contributions to a HSA.

I qualified to start an HSA last year, but never got around to it. I opened up one about a month ago, and put in a small contribution. I saw where you can keep contributing for last year up to Tax Day in April. Can I max out my contribution ($3050) for 2010 and use it for an above the line deduction in 2010, even though I didn't open the account until 2011?

Edit: Thank you for the answer!

Hartman fucked around with this message at 05:10 on Mar 14, 2011

Mattism
May 22, 2007

Hartman posted:

I have a question about the timing of contributions to a HSA.

I qualified to start an HSA last year, but never got around to it. I opened up one about a month ago, and put in a small contribution. I saw where you can keep contributing for last year up to Tax Day in April. Can I max out my contribution ($3050) for 2010 and use it for an above the line deduction in 2010, even though I didn't open the account until 2011?
Yes.

irs.gov posted:

When To Contribute

You can make contributions to your HSA for 2010 until April 18, 2011. If you fail to be an eligible individual during 2010, you can still make contributions, up until April 18, 2011, for the months you were an eligible individual.

WorldTravelerX
Jul 15, 2007
OK, more HSA questions.

I maxed out my HSA. I think. As a single person.
Do I get any benefit for that?
How is it reflected?

I have a high deductible health care plan at work.
I paid in some money, and my employer paid $500 as well.

So I'm looking at my W-2.
Box 12b (W) is $3,050.00
So do I somehow need to break this into my contribution of $2,550 and company's add-on of $500?

Do I want to muck around on form 8889 and on question #2 enter $2,550?

(Right now I'm using H&R Block software and it appears to be treating the Box 12b (W) entry of $3,050.00 as all from my employer, when most of that really came from me.)

tolerabletariff
Jul 3, 2009

Do you think I'm spooky?
Why the gently caress does Massachusetts get to tax my D.C. income? I worked for a few weeks over winter break last year in D.C. (because I'm a VA resident I pay VA taxes, not D.C. taxes) but then worked in Boston all summer long. Doing my MA nonresident income tax form they had me add in my earnings from when I was living at home. That doesn't make a whole lot of sense--at the time I was living in VA I wasn't using any MA state services or anything, why should they get a bite out of that apple?

Either way, it was like another $600 and probably resulted in a negligible reduction of my MA refund. Both my federal and MA returns are in the mail (I didn't bother filing a VA return, as it would have been for a pittance and I was well below the income threshold) so it doesn't matter anyway, I'm just curious how states where you're not a resident justify taxing income earned elsewhere...

ShadowHawk
Jun 25, 2000

CERTIFIED PRE OWNED TESLA OWNER

Captain Beans posted:

1) Yea you want your employer to know they made a mistake so that they can file an ammendment to the IRS. Considering you were a 1099MISC I doubt they will even bother because most places I see are terrible at fixing anything for 1099MISC.

2)When you fill out your schedule C you will list those parts you buy as expenses so you reduce that income by the ammount you were reimbursed. You won't be paying tax on it.
Regarding 2, do you mean a deduction? I'm concerned about the self-employment equivalent of payroll taxes here.

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!

tolerabletariff posted:

Why the gently caress does Massachusetts get to tax my D.C. income? I worked for a few weeks over winter break last year in D.C. (because I'm a VA resident I pay VA taxes, not D.C. taxes) but then worked in Boston all summer long. Doing my MA nonresident income tax form they had me add in my earnings from when I was living at home. That doesn't make a whole lot of sense--at the time I was living in VA I wasn't using any MA state services or anything, why should they get a bite out of that apple?

Either way, it was like another $600 and probably resulted in a negligible reduction of my MA refund. Both my federal and MA returns are in the mail (I didn't bother filing a VA return, as it would have been for a pittance and I was well below the income threshold) so it doesn't matter anyway, I'm just curious how states where you're not a resident justify taxing income earned elsewhere...

If you were not a full year resident of MA, then they cannot tax your DC income. Perhaps you entered something incorrectly that made the software either think that you were a resident of MA or that the DC income was taxable to MA?

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!

WorldTravelerX posted:

OK, more HSA questions.

I maxed out my HSA. I think. As a single person.
Do I get any benefit for that?
How is it reflected?

I have a high deductible health care plan at work.
I paid in some money, and my employer paid $500 as well.

So I'm looking at my W-2.
Box 12b (W) is $3,050.00
So do I somehow need to break this into my contribution of $2,550 and company's add-on of $500?

Do I want to muck around on form 8889 and on question #2 enter $2,550?

(Right now I'm using H&R Block software and it appears to be treating the Box 12b (W) entry of $3,050.00 as all from my employer, when most of that really came from me.)

If your W-2 lists $3,050 in box 12 code W then your contribution should already be excluded from your gross wages in box 1. If this is the case, then you have already received the benefit for the contributions and there is nothing further to claim. If it is not, then you should be able to deduct the HSA contributions that you made (not your employer) on your 1040.

Nuja
Jan 29, 2006
Alright, before anyone starts in on me, I know I'm a loving idiot. With that said, here's what I need a bit of help with. I'm 19, claim myself, yet have shared a bank account with my mother for the past year and a half(We started it when I was still a minor). My girlfriend and I split the bills 50/50 with her, buy our own food, basically just renting out my room.

I was ecstatic to be receiving an $831 federal, and a $336 state(KS) refund. I don't use checks, am currently without a debit card, and our online banking had not been set up at the time, so I had no way to grab my bank account/routing number. I give my mother a call, and she points me in the direction of her checkbooks. All goes fine, blah blah.

My state refund was issued March 3rd(5-7 days turnaround). My federal refund was issued March 11th(Should have been here by March 16th). I had a sneaking suspicion that something had gone terribly wrong, and my fears were confirmed after a bit of searching around. When my mother had pointed me towards her checkbooks, she neglected to tell me that they were ALL from her old, closed account(same bank), and the only checkbook from our current account had been on her person at the time.

The rest is easy to figure out. I was banking on that refund for the bills, as I had other expenses my actual income had to go to(Car, Insurance, Food, Phone, etc). I know that because the account in question is closed, the IRS will just mail a paper check which will take about 10 weeks to come in. For reference, I e-filed through H&R block.

With that out of the way, my question is: Is there any way for me to fix this? Is it possible to call and have the IRS switch my routing/banking account numbers, or am I just hosed?

Apologies for the long-winded, frazzled post. I'm a bit stressed out, and as you can see from the time, without sleep. Thank you in advance.

PS: The first thing on my to do list after getting this figured out? Get my own bank account.

Nuja fucked around with this message at 14:52 on Mar 15, 2011

Zeta Taskforce
Jun 27, 2002

Nuja posted:

Alright, before anyone starts in on me, I know I'm a loving idiot. With that said, here's what I need a bit of help with. I'm 19, claim myself, yet have shared a bank account with my mother for the past year and a half(We started it when I was still a minor). My girlfriend and I split the bills 50/50 with her, buy our own food, basically just renting out my room.

I was ecstatic to be receiving an $831 federal, and a $336 state(KS) refund. I don't use checks, am currently without a debit card, and our online banking had not been set up at the time, so I had no way to grab my bank account/routing number. I give my mother a call, and she points me in the direction of her checkbooks. All goes fine, blah blah.

My state refund was issued March 3rd(5-7 days turnaround). My federal refund was issued March 11th(Should have been here by March 16th). I had a sneaking suspicion that something had gone terribly wrong, and my fears were confirmed after a bit of searching around. When my mother had pointed me towards her checkbooks, she neglected to tell me that they were ALL from her old, closed account(same bank), and the only checkbook from our current account was on her person.

The rest is easy to figure out. I was banking on that refund for the bills, as I had other expenses my actual income had to go to(Car, Insurance, Food, Phone, etc). I know that because the account in question is closed, the IRS will just mail a paper check which will take about 10 weeks to come in. For reference, I e-filed through H&R block.

With that out of the way, my question is: Is there any way for me to fix this? Is it possible to call and have the IRS switch my routing/banking account numbers, or am I just hosed?

Apologies for the long-winded, frazzled post. I'm a bit stressed out, and as you can see from the time, without sleep. Thank you in advance.

PS: The first thing on my to do list after getting this figured out? Get my own bank account.

I think you know the answer to your question, but:

IRS.gov posted:

What will happen if I enter an incorrect routing or account number?


Be very careful entering your account and routing numbers. IRS will handle account or routing number errors on split refunds the same as for regular direct deposits and mistakes can result in several different scenarios. For example, if:

You omit a digit in the account or routing number of an account and the number does not pass IRS’ validation check, IRS will send you a paper check for the entire refund;

You incorrectly enter an account or routing number and your designated financial institution rejects and returns the deposit to IRS, IRS will issue a paper check for that portion of your refund;

You incorrectly enter an account or routing number that belongs to someone else and your designated financial institution accepts the deposit, you must work directly with the respective financial institution to recover your funds.

IRS assumes no responsibility for taxpayer error. Please, verify your account and routing numbers with your financial institution and double check the accuracy of the numbers you enter on your return.

Hufflepuff or bust!
Jan 28, 2005

I should have known better.
So I'm getting married this year, and am working on figuring out the tax implications and what I can do/take advantage of to maximize our tax savings. A few quick questions based on this:

1)Filing status is based on your status at the end of the year, so for me it will be married. Does this mean that I can change my withholding at work now to reflect "married" as my status (and therefore withhold less?)

2)The saver's credit lets you take a percentage of your qualified retirement contributions, but excludes you if you are a student. My income is slightly too high to qualify, but with my fiancee's we (married filing jointly) will be under the income limit. However, she is a student. Does this disqualify us entirely, or does it only disqualify the contributions that she makes to her own retirement account? (I.e., I can still claim my own because I am not a student and our combined income is less than 55k)?

3)Is there anything else (like the savers credit) that I could prepare for that a newly married couple might qualify for? No houses or anything like that, but I will be going from ~33k in income single to ~43k in income filing jointly.

A.s.P.
Jun 29, 2006

They're just a bunch of shapes. Don't read too deeply into it.
I stopped working full-time at my job (where I've worked FT for 3 years) in August 2010, when I started school. I got a W-2 for that amount of work, and my salary was paid via Direct Deposit. In December, I got a bonus check for $5k that was just written on a company check with no withholding. I didn't get any tax forms for the bonus, and asked if I needed a 1099 or something. My boss, who is the ad hoc financial administrator, said with uncertainty, "Oh yeah, good point." So he whipped up a 1099, but it feels wrong, especially considering I'd have to pay about $1k or so out in taxes. Could I somehow get that bonus re-submitted to me with taxes withheld, or is this the way it's supposed to go?

Edit: Also, would that be box 7 Non-employee compensation or box 3 Other income?

A.s.P. fucked around with this message at 20:37 on Mar 15, 2011

Captain Beans
Aug 5, 2004

Whar be the beans?
Hair Elf
Your boss is either an idiot or is trying to commit fraud.

If you are a normal employee your bonus would just be like extra wages. As such your employer would also be on the hook for their portions of FICA, medicare ect.

When you get a 1099MISC you are treated as your own business so you pay self employed taxes on your income to make up the lack of FICA, medicare, ect portions from the employer.

He probably gave it to you as a check so he woudln't have to deal with either of the situations and only gave you a 1099MISC because you asked about it. Or they already did their books and didn't want to go fuddling around with everything to add bonuses.

You need to talk to him about this, because you didn't work as an independent contractor so there should be no 1099MISC. If he 'just whipped it out' he might not have even filled it with the IRS so that is good for you. If he already filled it then you are going to have to go through some more poo poo that I couldn't specifically tell you.


ShadowHawk posted:

Regarding 2, do you mean a deduction? I'm concerned about the self-employment equivalent of payroll taxes here.

You won't pay SE tax on those parts. You only pay SE tax on net income for self business. You take their costs(reducing the actual income) before you figure the SE tax owed. Obviously you will be paying some SE tax from the other income on the 1099MISC.

Captain Beans fucked around with this message at 21:23 on Mar 15, 2011

A.s.P.
Jun 29, 2006

They're just a bunch of shapes. Don't read too deeply into it.

Captain Beans posted:

Your boss is either an idiot or is trying to commit fraud.

If you are a normal employee your bonus would just be like extra wages. As such your employer would also be on the hook for their portions of FICA, medicare ect.

When you get a 1099MISC you are treated as your own business so you pay self employed taxes on your income to make up the lack of FICA, medicare, ect portions from the employer.

He probably gave it to you as a check so he woudln't have to deal with either of the situations and only gave you a 1099MISC because you asked about it. Or they already did their books and didn't want to go fuddling around with everything to add bonuses.

You need to talk to him about this, because you didn't work as an independent contractor so there should be no 1099MISC. If he 'just whipped it out' he might not have even filled it with the IRS so that is good for you. If he already filled it then you are going to have to go through some more poo poo that I couldn't specifically tell you.

Thanks. I'm not sure if this makes a difference, but after leaving my job, I worked for about 2 weeks while I was on winter break this December 2010. It was not salaried and was considered part-time (hourly wage). I haven't received a check for that work yet. Maybe he is considering this work as "independent contractor" wages?

If not - do I just ask him to resubmit the payment?

Captain Beans
Aug 5, 2004

Whar be the beans?
Hair Elf

amishsexpot posted:

Maybe he is considering this work as "independent contractor" wages?

He better not. It doesn't matter if you only worked to weeks. If you did the same stuff when you were working fulltime it isn't independent contractor work. If you worked at their job location, they could tell you how to do your work, used their computers/tools you were an employee and that should be included on a W2 not a 1099MISC.

Your bonus and any of that 2 week work needs to be included on an updated W2. Check and see if the 2 weeks already is included. If he files a 1099MISC for that stuff to the IRS you'd kind of be hosed and would then need to file a SS-8 to request they rule you as an employee instead of a contractor. This isn't good for either of you.

If he doesn't update this to a W2 then you get to pay all the SE tax or you tell the IRS he is trying to shaft you.

Zantie
Mar 30, 2003

Death. The capricious dance of Now You Stop Moving Forever.
I have a question about if my husband and I need to amend our 2010 return due to a late 1099-MISC form he just got.

My husband works freelance and keeps a good record on income so this amount was already included under Gross receipts with all the other checks he got. So to include the late 1099-MISC he'd have to subtract that amount from the other non-1099'ed income he got, but ultimately that still results in the same amount of self-employment income.

In other words:

Filed with no 1099-MISC's and he had SE income total of $6596.

With the 1099-MISC the SE income total is still $6596 ($2414 on the 1099 + $4182 from everything else).

Because this doesn't change any of the tax due nor our refund amount do we even need to amend this? My worry is that the IRS would get the 1099 from the company and then assume my husband reported $6596 without the $2414, and then send us a bill assuming he made $9010. Would they do that, or would they figure we included it already because it was mailed to us 8 weeks late?

AbbiTheDog
May 21, 2007

Zantie posted:

I have a question about if my husband and I need to amend our 2010 return due to a late 1099-MISC form he just got.

My husband works freelance and keeps a good record on income so this amount was already included under Gross receipts with all the other checks he got. So to include the late 1099-MISC he'd have to subtract that amount from the other non-1099'ed income he got, but ultimately that still results in the same amount of self-employment income.

In other words:

Filed with no 1099-MISC's and he had SE income total of $6596.

With the 1099-MISC the SE income total is still $6596 ($2414 on the 1099 + $4182 from everything else).

Because this doesn't change any of the tax due nor our refund amount do we even need to amend this? My worry is that the IRS would get the 1099 from the company and then assume my husband reported $6596 without the $2414, and then send us a bill assuming he made $9010. Would they do that, or would they figure we included it already because it was mailed to us 8 weeks late?

The IRS computers tie the gross receipts listed on sch. C to the total nonemployee compensation listed on Box 7, Form 1099-MISC. As long as the gross receipts listed on C are over the 1099 totals you're fine.

KennyG
Oct 22, 2002
Here to blow my own horn.

Zantie posted:

Because this doesn't change any of the tax due nor our refund amount do we even need to amend this? My worry is that the IRS would get the 1099 from the company and then assume my husband reported $6596 without the $2414, and then send us a bill assuming he made $9010. Would they do that, or would they figure we included it already because it was mailed to us 8 weeks late?

To answer your question more directly, you'd get audited. Likely a paper audit, but possibly a full one. Assuming everything else is above board too, you're ok. I believe the ultimate arbitor of penalties is the tax paid. http://books.google.com/books?id=YZ...mistake&f=false says there is no precedent in the US Tax Code for a penalty of a harmless error in a previous year which created an error in a subsequent year.

Also penalties that aren't due to fraud or frivilous positions are calculated based on the net tax difference. (what you owed vs. what you paid, obviously they don't assess a penalty if they audit you and find overpayment)

Zantie
Mar 30, 2003

Death. The capricious dance of Now You Stop Moving Forever.

KennyG posted:

To answer your question more directly, you'd get audited. Likely a paper audit, but possibly a full one. Assuming everything else is above board too, you're ok. I believe the ultimate arbitor of penalties is the tax paid. http://books.google.com/books?id=YZ...mistake&f=false says there is no precedent in the US Tax Code for a penalty of a harmless error in a previous year which created an error in a subsequent year.

Also penalties that aren't due to fraud or frivilous positions are calculated based on the net tax difference. (what you owed vs. what you paid, obviously they don't assess a penalty if they audit you and find overpayment)

Well, this confuses me even more when comparing your answer to AbbiTheDog's. If we would be audited they'd find that my husband already reported that income. We sent in our 2010 tax return before receiving the 1099-MISC. He didn't forget to include that income, it's there in the gross receipts since he kept record of all the checks he got last year.

Why are you bringing up harmless error for other years? The tax paid stays the same, which is why I'm wondering if we need to clarify it or do what AbbiTheDog suggested and leave it be.

KennyG
Oct 22, 2002
Here to blow my own horn.

Zantie posted:

Well, this confuses me even more when comparing your answer to AbbiTheDog's. If we would be audited they'd find that my husband already reported that income. We sent in our 2010 tax return before receiving the 1099-MISC. He didn't forget to include that income, it's there in the gross receipts since he kept record of all the checks he got last year.

Why are you bringing up harmless error for other years? The tax paid stays the same, which is why I'm wondering if we need to clarify it or do what AbbiTheDog suggested and leave it be.

Leave it be.

Harmless error is what you have. It was not disclosed individually as part of the schedule, but it was disclosed. In the event that an obscure rule affects that in future years, the fact that it is a harmless error (did not change your tax requirement) means that it will almost certainly just be treated as filed.

The problem with tax law is that you have to treat individuals who make only a few thousand dollars a year the same as individuals with billions in assets and many businesses. Given the size of the tax code and the sheer volume of potential issues, there are always situations that can arrise that no one thinks about. CPA's and Tax lawyers like this, but it doesn't help the individual or small business owner trying to file simple taxes without spending a fortune.

As not your lawyer, and purely someone on the internet, I would just leave it be as it would not change your net tax position. If you want more sound advice, go see a CPA or Tax Lawyer.

qirex
Feb 15, 2001

So E-Trade just sent me an amended 1099-DIV but I filed a month ago. Can I submit a claim to them for my cost to amend my return? The difference is like $7 I guess they forgot to include even though my 1099 from them was 2 weeks late.

AbbiTheDog
May 21, 2007

KennyG posted:

To answer your question more directly, you'd get audited. Likely a paper audit, but possibly a full one. Assuming everything else is above board too, you're ok. I believe the ultimate arbitor of penalties is the tax paid. http://books.google.com/books?id=YZ...mistake&f=false says there is no precedent in the US Tax Code for a penalty of a harmless error in a previous year which created an error in a subsequent year.

Also penalties that aren't due to fraud or frivilous positions are calculated based on the net tax difference. (what you owed vs. what you paid, obviously they don't assess a penalty if they audit you and find overpayment)

Wow, where did this come from? More realistic approach of under-reporting is a CP2000 matching notice and automatic calculation of tax owed. No need to frighten the poor person to death.

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!

AbbiTheDog posted:

Wow, where did this come from? More realistic approach of under-reporting is a CP2000 matching notice and automatic calculation of tax owed. No need to frighten the poor person to death.

What CP2000 notice? The income on the 1099 in question was already included on the schedule C.

KennyG
Oct 22, 2002
Here to blow my own horn.

AbbiTheDog posted:

Wow, where did this come from? More realistic approach of under-reporting is a CP2000 matching notice and automatic calculation of tax owed. No need to frighten the poor person to death.

What is people's fear of audits? I am the first one to dismiss the 'if you have nothing to hide, what are you afraid of' when it comes to people taking civil rights in Nanny States. However, taxes are different. You have filed a form with a government agency stating facts. They are simply checking your facts. If the facts are as you say, there is nothing else to worry about. I wonder if this dates back to before the mid 1980s when you didn't have to actually list a legit social to have a dependent and so many people claimed an extra few kids to reduce their tax burden. In fact there is a story that by tax roll calculation about 7 million children died as a result of that regulation. http://en.wikipedia.org/wiki/Social_Security_number#Use_required_for_federal_tax_purposes

I know small businesses and self employed may have problems because they guestimate some of their numbers, but this does not account to the fear that some have with respect to audits.

furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!
Even a no change audit can be expensive (if you have a representative go in for you), invasive, time consuming, and an all around pain in the rear end. So even if you "have nothing to hide" it still usually isn't a pleasant experience for most people.

AbbiTheDog
May 21, 2007

furushotakeru posted:

What CP2000 notice? The income on the 1099 in question was already included on the schedule C.

I know, but even if it didn't, haven't seen too many audits start from a matching notice.

In fact, I haven't seen many audits at all. I do around 1,000 returns a year (business, trust, personal) and we had four audits last year, of which two were from another CPA I bought out filing the wrong forms.

KennyG
Oct 22, 2002
Here to blow my own horn.

furushotakeru posted:

Even a no change audit can be expensive (if you have a representative go in for you), invasive, time consuming, and an all around pain in the rear end. So even if you "have nothing to hide" it still usually isn't a pleasant experience for most people.

I can see that, I guess it all depends on your sophistication or level of reaction. I guess I should revise my statement to a reassurance, that audits aren't always an instant rear end rape that people think they are.


AbbiTheDog posted:

I know, but even if it didn't, haven't seen too many audits start from a matching notice.

In fact, I haven't seen many audits at all. I do around 1,000 returns a year (business, trust, personal) and we had four audits last year, of which two were from another CPA I bought out filing the wrong forms.

This should actually make people feel pretty good. .4% is pretty drat good, especially for a public preparer (presumably bigger incomes, higher chances)

The national averages are about 1% for < $25k and 2% >$100K from http://www.fool.com/personal-finance/taxes/2006/03/17/top-5-audit-myths.aspx

It's not random though, I wonder what the 'random' rate is.

KennyG fucked around with this message at 23:10 on Mar 18, 2011

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furushotakeru
Jul 20, 2004

Your Honor, why am I pink?!
Audits are almost never random, they only audit your return if they think there is something to find.

The way the local IRS agents describe it, the IRS computer looks at each filed return and assigns a Discriminate Information Function (DIF) score to it, and those returns with high DIF scores then get looked over by a revenue agent who then makes a recommendation as to whether or not the return should be audited, and whether it will be a correspondence audit or an office audit. If it gets sent for an office audit then the group manager decides whether it is an in-the-IRS-office audit or a field audit at the place of business/tax pro's office.

Of course, what exactly determines the DIF score is a secret to keep people from gaming the system too much. All we know are general guidelines based on what issues are frequently audited (the so-called "red flags") and that the IRS systems looks for statistical anomalies on return such as abnormally high expense to income ratios, etc.

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