Originally Posted by Beecherman
Thanks for the quick reply!
#1; The income in question was reported on my 1040 as self-employment income (schedule C), and all applicable taxes were paid.
#2: But when the IRS received the Forms 1096/1099-MISC it is seeing the income in Box 3 instead of Box 7.
#3;So if I understand you correctly you are saying that I must now include the income in question on line 21 of my Form 1040 IN ADDITION to line 12? How can that be? Just because the income was reported incorrectly on the Form 1099-MISC & subsequent Form 1096?
Thanks for your help....M
#1; OK I see very good.
#2;I guess so as i said ULESS the payer corrected the 1099. as you said, the pyaer reported the income that needed to be reported in box 7 in box 3.A 1096 form acts much like a summary cover page for 1099 forms;A 1096 requires the payer to identify his name, the total amount of payment on the 1099 misc given to you.
#3;no, i did not mean that. Then, yu are ok. As we know, the income reported in Box 3 was the self employer income that had to be reported in Box 7 and was subject to seca tax.Basically, income on 1099 MISC Box 3 is NOT subject to self employment tax ;this would be Form 1040 Line 21 other income ( i.e., prizes, spiffs, etc.) while income on1099 MISC box 7 IS subject to self employment tax and is usually reported on Sch C/SE with expenses to offset some of this income.
In general aslongas the payer filed a return with the IRS and later discovered/(or you let him know) he made an error on it, he must correct it as soon as possible and file Copy A and Form 1096 with the IRS and should Identify the correction needed based on Error Type 1 or 2 and furnish statements to you showing the correction.