Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 05-10-2010, 04:49 PM
Junior Member
 
Join Date: May 2010
Posts: 1
I believe my employer is incorrectly reporting 1099 wages

I work for a transportation company and we have over 40 independent contractors (owner operators) and a handful of them have brought to my attention that their 1099's are wrong. Since I am no expert, our company pulls a 25% commission off of gross revenues. If a contractor made $100K in gross revenues, the company pulled 25% commission right off the top, and they owner operators grossed (were paid) $75K, the $75K would be their taxable income, correct? Our company is reporting their gross revenues as $100K and the owner operators are having to pay taxes on that amount even though $25K of it was pulled for a commission. Advice??



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 05-11-2010, 10:10 AM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,399
Blog Entries: 3
Its very simple, your independent contractors report their income on Schedule C as having received $100,000 as their gross income. This would match the 1099-Misc amounts. However, they are also entitled to "any reasonable, necessary and ordinary deductions that are incurred to production of this income."

Hence, commissions paid out become an expense along with any other deductions these owner operators are entitled. Thus, at a minimum, the gross income would be $100,000 along with Commissions paid of $25,000 leaving a minimum net income of $75,000.

With the services of a good tax professional, the owner operators would be entitled to additional expenses which would ensure that there taxable income to be below $75,000.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
1099-MISC Cash vs Accrual Reporting Astice Income 0 04-05-2010 09:29 PM
1099 from an employer that I cannot reach araukar Income 1 02-02-2010 01:21 AM
Double Reporting of 1099-misc to recipient JGRMinneapolis Miscellaneous 3 03-02-2009 03:36 PM
Reporting 1099-Misc for internship smileforsuzy Income 1 02-25-2009 01:24 PM
As a employer, how do I file an amended 1099 to IRS? Jason Income 1 04-09-2008 12:00 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning