Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-18-2008, 11:40 PM
Junior Member
Join Date: Feb 2008
Posts: 1
Wrong information on 1099?

I am a payroll employee. I m not a contractor or a business. My employer reported on a 1099 all my reimbursed expenses for 2007.
Now it looks like I received $8500 in additional income, but that was entirely reimbursements for my travel expenses.
What should I do? Someone told me to file a Schedule C, and deduct the expenses. But if I am not a business, what do I enter in the top lines of Schedule C?
Is there anything I can do to make my employer rescind or correct the 1099?
Please help.

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 02-19-2008, 12:50 PM
TaxGuru's Avatar
Tax Guru
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,413
Blog Entries: 3
What are the options if an employer included reimbursement exp's on your 1099-Misc?

There are really 2 options available to you to correct this mistake by the employer.

First option:
Contact your employer as soon as possible and explain in writing the error on the 1099-Misc and explain in detail that your understanding was that the travel expenses were a reimbursement and would not be included as income to you.

The employer may then quickly file an amended 1099-Misc for you and you might be fortunate to receive the corrected 1099-Misc (Amended 1099-Misc) within the week.

However, because the deadline for 1099-Misc report is fast approaching and there may be a cost attached to filing an amended 1096 Annual Transmittal Letter along with all the 1099-Misc reports, you might find that the employer might be reluctant to do this.

He may suggest to you instead, "that you file a Schedule C and report these expenses as deductions against the total amount reported on the 1099-Misc."

Second Option:
Simply ignore option 1, and instead follow the employer suggestion of filing a Schedule C and reporting the entire amount reported on your 1099-Misc as Income.

Then, you should claim all your travel expenses that should have instead been treated as a reimbursement. In this manner the net profit from your Schedule C would be the same amount that should have been reported on the 1099-Misc.

As such, there is nothing to worry in taking the 2nd option, and this is quite common especially in the IT consulting business. In this business, the employers simply report the entire payments paid to the consultants on a 1099-Misc.

The independent consultants report this entire income (per 1099-Misc) on their Schedule C, and deduct all their travel & lodging expense along with related other ordinary and necessary expenses.

Perhaps, by reporting this income on your Schedule C, you might also be able to report other ordinary and necessary expenses such as office expenses, cell phone expense, parking, auto expenses, and expenses directly related to your job as a independent consultant/contractor!

As a consequence of filing a Schedule C, it might prove to be more beneficial to you as well in that you may save taxes as well, both in terms of self-employment taxes and regular taxes as well.

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

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

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

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