1099 Misc Question/Problem

woodrob12 · #1 (**permalink**) 04-23-2008, 10:00 PM

My wife was alloted $3,000 for her 2007 Continuing Medical Education (CME) along with her regular salary.

The question I have is "are these perks that were supposed to pay for my Wife's CME supposed to be reported as a 1099-Misc income and be subject to S/E Taxes?

Also, my wife actually received a 1099-Misc in the amount of $6,000 but it was incorrectly stated, and should have been only $3,000. This was immediately acknowledged to be an error by my Wive's manager and another corrected 1099-Misc was submitted.

I am concerned that this may trigger an audit. Should I be concerned about this this?

Lastly, how must I report this 1099-Misc Income on my Tax return? Should I should it as Schedule C item and list my wife's expenses as part of unreimbursed employee business expenses? Tks.

Phew...

TaxGuru · #2 (**permalink**) 04-24-2008, 12:36 PM

To answer your first question, should the Perk have resulted in an 1099-Misc? Well, that all depends on your employer, but, generally, they are correct in my opinion based on the circumstances that you have outlined here. A perk can have a taxable consequence especially if they result in cash payments to individual employees.

My concern is did your wife spend the $3,000 for continuing medical education? If so, then there would be minimal tax impact for you, as you could report $3,000 as Schedule C income subject to S/E Taxes reduced by Medical Education expenses.

Regarding the wrong 1099-Misc, usually this does not trigger an audit especially in your circumstances. So, there is nothing to fear! Simply file an amended tax return as soon as possible and you would receive a slightly bigger refund.

Just include an explanation stating that the employer corrected the 1099-Misc which resulted in a reduction in 1099-Misc by $3,000.

I dont think the last paragraph is applicable here! I would recommend continuing the same strategy going forward by reporting the 1099-Misc as income subject to S/E taxes and including any seminar related expenses to offset this 1099-Misc Income.