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Old 02-16-2011, 07:11 AM
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1099 for equipment repairs

I started a new business in 2010 selling tires and repairing vehicles. I took on a job to repair a blown engine in customer's skid steer loader. I found him a new replacement engine on ebay and told him to just give me what the engine cost. He made the check out to me personally and not my business. I deposited the check into my business account. I then completed the engine swap running the transaction through my business and invoiced him accordingly. He again made the check out to me personally and I again deposited it in my business account.

I just received a 1099-misc from him for the amount of the entire job. Is this the correct use of a 1099? How do I handle this form? The total amount of the 1099 is 7100.00 but of this amount, only 1500.00 is labor, the rest is the cost of the engine and related parts and sales tax.

Thanks in advance



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Old 02-17-2011, 05:18 AM
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“ Is this the correct use of a 1099?”-Yes; a 1099 is received by persons paid $600 or more as an independent contractor by a trade or business.
“ How do I handle this form? The total amount of the 1099 is 7100.00 but of this amount, only 1500.00 is labor, the rest is the cost of the engine and related parts and sales tax?”----> As a Sole Proprietor (selfemployed), you receive a 1099-misc, as nonemployee income. Then you must file Sch C ( or C EZ). On the Sch C you need to enter your income and expenses. As long as the amount on Sch SE line 4 is $400 or exceeds $00, you MUST pay selfemployment taxes. Also, as a sole proprietor or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. However, you do not have to pay estimated tax for the current year if you meet all three of the following conditions; you had no tax liability for the prior year ;you were a U.S. citizen or resident for the whole year ;your prior tax year covered a 12 month period.
Please visit the IRS website here; Self-Employment Tax (Social Security and Medicare Taxes)
Estimated Taxes



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Old 02-17-2011, 08:15 PM
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Thank you for the clarification. I think I understand how this works now. I am using turbo tax for home and small business and it let me enter the 1099-misc and now that I am understanding the schedule C a little better, it will all come out in the wash.



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